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NXP

NXPI · Nasdaq

Operating profit grew nearly twice as fast as revenue

Operating expenses rose 7.4% while revenue rose 19.3%, so operating income climbed 37.5% and the operating margin reached 32.4% from 28.1%.

Q3 FY2026, the quarter to Sep 27, 2026 · 10-Q filed Oct 27, 2026

Q3 FY2026 · revenue
$3.8B+33.5% on the year
Operating margin
32.4%
Net income
$884.0M
Free cash flow, quarter
$1.2B

Largest source of revenue: Distributors, 59.3% of the total.

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Key insights · Q3 FY2026
  1. 01

    Operating profit grew nearly twice as fast as revenue

    Operating expenses rose 7.4% while revenue rose 19.3%, so operating income climbed 37.5% and the operating margin reached 32.4% from 28.1%.

    Why it matters

    Revenue rose 19.3% to $3,786 million from $3,173 million a year earlier. Total operating expenses rose 7.4% to $958 million and fell to 25.3% of revenue, 2.8 points lower. Operating income rose 37.5% to $1,228 million from $893 million.1

    The filing says the rises in research and development and in selling and administrative costs were driven primarily by increased variable compensation due to improved company performance. Gross profit added to the effect: it rose 22.5%, faster than revenue, which the filing attributes to higher sales volumes and utilization.1

    The same pattern shows against the prior quarter. Revenue rose to $3,786 million from $3,496 million, while operating income rose further in proportion, to $1,228 million from $1,071 million.1

    AnalysisAnalysis: because the filing names performance-linked pay as the main source of the cost increase, the engineering base itself grew less than the reported expense lines. That is why so much of each extra dollar of revenue reached operating income, and also why part of this year's expense would ease in a weaker year.

  2. 02

    Margins above any full year in the record

    Gross margin of 57.8% and operating margin of 32.4% both exceed every full year in the record, where operating margin peaked at 28.8%.

    Why it matters

    Across the full years in the record, the highest operating margin was 28.8%, on revenue of $13,205 million and operating income of $3,797 million. The highest gross margin came in that same year, with gross profit of $7,517 million, still below this quarter's 57.8%. The latest full year ran at a gross margin of 54.7%, on revenue of $12,269 million, gross profit of $6,716 million and operating income of $3,047 million.1

    The filing attributes the gross margin gain over the prior quarter, 57.8% against 57.3%, to higher sales volumes and higher manufacturing utilization, and the gain over the year-earlier 56.3% to higher volumes and utilization. Cost of revenue grew 15.2% while revenue grew 19.3%.1

    AnalysisAnalysis: this sets one quarter against full years, and a single quarter can run above a year's average. The comparison shows how far the cost structure has moved with fuller factories and slower expense growth, not what a full year will deliver.

  3. 03

    Free cash flow reached 1.36 times net profit

    Free cash flow of $1,205 million was 1.36 times net income attributable to stockholders and more than double the $508 million of a year earlier.

    Why it matters

    Operating cash flow was $1,256 million, 1.42 times net income attributable to stockholders of $884 million. Capital spending was $51 million, 4.1% of operating cash flow, against $77 million a year earlier, leaving free cash flow of $1,205 million, 31.8% of revenue.1

    A year earlier, operating cash flow was $585 million and free cash flow $508 million, against net income attributable to stockholders of $631 million. The filing points to accrued variable compensation as a main driver of the rise in liabilities this year, which is pay earned but not yet paid out.1

    The company's free cash flow subtracts spending on plant and equipment only. Equity contributions to its foundry ventures sit in investing cash flow, and payments to secure production supply sit in operating cash flow, so capacity is also being paid for on other lines.1

    AnalysisAnalysis: the gap between cash and profit has two parts. Some is timing, such as bonuses accrued now and paid later, which reverses when they are paid. Some is structural, since depreciation runs above the low capital spending. Several quarters would be needed before treating this ratio as normal.

Sources

  1. 1.NXP 10-Q for the period to 2026-09-27 (the filing), Oct 27, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $3.5B in FY2009 to $12.3B in FY2025, the operating margin from -26.5% to 24.8%, over 16 years.

  • Revenue$12.3B
  • Operating income$3.0B
  • Operating margin24.8%
Period
Q3 FY2026
Revenue
$3.8B
Operating income
$1.2B
Operating margin
32.4%
Net income
$884.0M
Free cash flow
$1.2B
Business performance

Does the profit turn into cash?

Q3 FY2026: free cash flow of $1.2B against net income of $884.0M in the quarter.

  • Operating cash flow$2.8B
  • Capital expenditure$397.0M
  • Free cash flow$2.4B
  • Net income$2.0B

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

ContractWithCustomerSalesChannel

Supplemental Financial Information - Schedule of Disaggregation of revenue (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
57.8%
Source10-Q, Derived from Gross profit and Revenue in the 10-Q filed 2026-10-27
Operating margin
32.4%
Source10-Q, Derived from Operating income (loss) and Revenue in the 10-Q filed 2026-10-27
Net margin
23.3%
Source10-Q, Derived from Net income (loss) attributable to stockholders and Revenue in the 10-Q filed 2026-10-27
Free cash flow, quarter
$1.2B
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-27
Free cash flow margin, quarter
31.8%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-27
Cash conversion, quarter
1.42x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-27
Capital spending, quarter
1.3%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-10-27
Revenue growth
+33.5%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

ContractWithCustomerSalesChannel

Distributors$2.2B59.3%
Direct$1.5B39.6%
Other$44.0M1.2%

Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-27

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ3 FY2026Of revenueSource
Cost of revenue$1.6B42.2%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-10-27
Operating income (loss)$1.2B32.4%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-27

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement20 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeOf revenueSource
Income Statement
Revenue$3.79B$3.17B+19%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-10-27
Cost of revenue (shown as a deduction)($1.60B)$1.39B+15%42.2%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-10-27
Gross profit$2.19B$1.79B+22%57.8%Source10-Q, us-gaap:GrossProfit, as reported in the 10-Q filed 2026-10-27
Research and development (shown as a deduction)($615.0M)$575.0M+7.0%16.2%Source10-Q, us-gaap:ResearchAndDevelopmentExpense, as reported in the 10-Q filed 2026-10-27
Selling, general and administrative (shown as a deduction)($313.0M)$286.0M+9.4%8.3%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-10-27
Amortization of acquisition-related intangible assets (shown as a deduction)($30.0M)$31.0M-3.2%0.8%Source10-Q, us-gaap:AmortizationOfAcquisitionCosts, as reported in the 10-Q filed 2026-10-27
Total operating expenses (shown as a deduction)($958.0M)$892.0M+7.4%25.3%Source10-Q, us-gaap:OperatingExpenses, as reported in the 10-Q filed 2026-10-27
Other income (expense)-$3.0M-$2.0M+50%0.1%Source10-Q, us-gaap:OtherOperatingIncomeExpenseNet, as reported in the 10-Q filed 2026-10-27
Operating income (loss)$1.23B$893.0M+38%32.4%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-10-27
Financial income (expense):
Other financial income (expense)-$97.0M-$98.0M-1.0%2.6%Source10-Q, nxpi:OtherFinancialIncomeExpense, as reported in the 10-Q filed 2026-10-27
Income Statement
Income (loss) before income taxes$1.13B$795.0M+42%29.9%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments, as reported in the 10-Q filed 2026-10-27
Benefit (provision) for income taxes (shown as a deduction)($228.0M)$148.0M+54%6.0%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-10-27
Results relating to equity-accounted investees-$4.0M-$1.0M+300%0.1%Source10-Q, us-gaap:IncomeLossFromEquityMethodInvestmentsNetOfDividendsOrDistributions, as reported in the 10-Q filed 2026-10-27
Net income (loss)$899.0M$646.0M+39%23.7%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-27
Less: Net income (loss) attributable to non-controlling interests$15.0M$15.0M0.0%0.4%Source10-Q, us-gaap:NetIncomeLossAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-27
Net income (loss) attributable to stockholders$884.0M$631.0M+40%23.3%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-10-27
Earnings per share data:
Basic net income (loss) (in dollars per share)$4$3+40%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-10-27
Diluted net income (loss) (in dollars per share)$3$2+40%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-10-27
Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic (in shares)252,123,000252,170,000-0.0%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-10-27
Diluted (in shares)253,831,000254,310,000-0.2%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-10-27
Cash flow statement2 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ3 FY2026A year earlierChangeSource
Cash flows from operating activities:
Net income (loss)$899.0M$646.0M+39%Source10-Q, us-gaap:ProfitLoss, as reported in the 10-Q filed 2026-10-27
Statement of Cash Flows
Cash and cash equivalents at end of period$3.94B$3.45B+14%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-10-27
Balance sheet32 lines, as presented in the 10-Q
LineQ3 FY2026A year earlierChangeSource
Current assets:
Cash and cash equivalents$3.94BSource10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-10-27
Accounts receivable, net$1.26BSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-10-27
Assets held for sale$92.0MSource10-Q, us-gaap:AssetsOfDisposalGroupIncludingDiscontinuedOperationCurrent, as reported in the 10-Q filed 2026-10-27
Inventories, net$2.60BSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-10-27
Other current assets$544.0MSource10-Q, us-gaap:OtherAssetsCurrent, as reported in the 10-Q filed 2026-10-27
Total current assets$8.44BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-10-27
Non-current assets:
Deferred tax assets$1.30BSource10-Q, us-gaap:DeferredIncomeTaxAssetsNet, as reported in the 10-Q filed 2026-10-27
Other non-current assets$3.43BSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-10-27
Property, plant and equipment, net of accumulated depreciation of $6,634 and $6,366 respectively$2.80BSource10-Q, us-gaap:PropertyPlantAndEquipmentNet, as reported in the 10-Q filed 2026-10-27
Identified intangible assets, net of accumulated amortization of $851 and $820 respectively$1.38BSource10-Q, us-gaap:FiniteLivedIntangibleAssetsNet, as reported in the 10-Q filed 2026-10-27
Goodwill$10.26BSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-10-27
Total non-current assets$19.17BSource10-Q, us-gaap:AssetsNoncurrent, as reported in the 10-Q filed 2026-10-27
Assets
Total assets$27.61BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-10-27
Current liabilities:
Accounts payable$1.09BSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-10-27
Restructuring liabilities-current$83.0MSource10-Q, us-gaap:RestructuringReserveCurrent, as reported in the 10-Q filed 2026-10-27
Other current liabilities$1.80BSource10-Q, us-gaap:OtherLiabilitiesCurrent, as reported in the 10-Q filed 2026-10-27
Short-term debt$999.0MSource10-Q, us-gaap:DebtCurrent, as reported in the 10-Q filed 2026-10-27
Total current liabilities$3.97BSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-10-27
Non-current liabilities:
Long-term debt$9.98BSource10-Q, us-gaap:LongTermDebtAndCapitalLeaseObligations, as reported in the 10-Q filed 2026-10-27
Restructuring liabilities$65.0MSource10-Q, us-gaap:RestructuringReserveNoncurrent, as reported in the 10-Q filed 2026-10-27
Other non-current liabilities$1.13BSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-27
Total non-current liabilities$11.17BSource10-Q, us-gaap:LiabilitiesNoncurrent, as reported in the 10-Q filed 2026-10-27
Total liabilities$15.14BSource10-Q, us-gaap:Liabilities, as reported in the 10-Q filed 2026-10-27
Equity:
Non-controlling interests$377.0MSource10-Q, us-gaap:MinorityInterest, as reported in the 10-Q filed 2026-10-27
Stockholders’ equity:
Common stock, par value €0.20 per share:$56.0MSource10-Q, us-gaap:CommonStockValue, as reported in the 10-Q filed 2026-10-27
Capital in excess of par value$15.75BSource10-Q, us-gaap:AdditionalPaidInCapitalCommonStock, as reported in the 10-Q filed 2026-10-27
Treasury shares, at cost: (shown as a deduction)($4.50B)Source10-Q, us-gaap:TreasuryStockCommonValue, as reported in the 10-Q filed 2026-10-27
Accumulated other comprehensive income (loss)$150.0MSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-10-27
Accumulated deficit$632.0MSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-10-27
Total stockholders’ equity$12.09BSource10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-10-27
Equity:
Total equity$12.47B$10.43B+20%Source10-Q, us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest, as reported in the 10-Q filed 2026-10-27
Liabilities and equity
Total liabilities and equity$27.61BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-10-27

About this data

Source
NXP 10-Q, accession 0001413447-26-000059, filed Oct 27, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds NXP's model up, and what could bend it

Competitive edge

  • One engineering base serves several end markets

    Research and development rose 7.0% to $615 million while revenue rose 19.3%, so engineering spend fell to 16.2% of revenue from 18.1%.

    The detail

    The filing says growth in Automotive, Industrial & IoT and Communication Infrastructure & Other came predominantly from processors and mixed-signal products, the same product families across those markets. NXP reports a single segment, managed as one whole.1

    AnalysisAnalysis: when one set of processor and mixed-signal designs sells into cars, factories and networks, rising demand in any of them uses engineering already paid for. That is how research and development can fall as a share of revenue while the company keeps spending more in dollars.

  • Partner foundries keep NXP's own capital spending low

    Capital spending was $51 million, 1.3% of revenue, while NXP secures added capacity through stakes in foundry ventures rather than new plants of its own.

    The detail

    NXP consolidates SSMC, a joint venture with TSMC, and holds equity stakes in VSMC and ESMC in exchange for secured capacity. Annual capital spending fell from $1,063 million in the record's highest-spending year to $397 million in the latest full year, when free cash flow was $2,423 million.1

    AnalysisAnalysis: the model swaps a building cost for a purchase obligation. It keeps the capital line low and the asset base lighter, but the commitment to take output stays in place whatever demand does.

  • Distributors extend reach at low selling cost

    Distributors sold $2,244 million, 59.3% of revenue, while selling, general and administrative costs fell to 8.3% of revenue from 9.0%.

    The detail

    Direct sales were $1,498 million, 39.6% of revenue, and other sales $44 million. Selling, general and administrative costs were $313 million, up 9.4% against revenue growth of 19.3%.1

    AnalysisAnalysis: distributors carry inventory, handle small orders and serve many customers NXP could not reach one by one, while NXP keeps the design relationship. Part of the cost of that breadth is carried by the channel rather than by NXP's own selling budget.

What to watch

  • The same operating leverage cuts the other way

    From the record's peak revenue year to the latest full year, revenue fell 7.6% while operating income fell 16.8%, more than twice as fast.

    The detail

    Revenue went from $13,276 million to $12,269 million, and operating income from $3,661 million to $3,047 million. In the peak revenue year the operating margin was 27.6%, against 32.4% this quarter.1

    AnalysisAnalysis: the filing ties this quarter's gross margin gain to volumes and utilization. Factory costs that are largely fixed spread over more units when shipments rise and over fewer when they fall. Performance-linked pay would ease in a weaker year and soften the fall, but fixed factory and engineering costs would not.

  • Foundry commitments are owed whatever demand does

    NXP has committed further equity to VSMC and ESMC and a lifetime minimum loading of the VSMC factory, obligations that hold if demand weakens.

    The detail

    The purchase commitment with VSMC applies once wafer production starts and runs over the life of the factory. NXP also carries other supplier purchase commitments stretching over many years, and under the joint venture agreement part of any dividend paid from SSMC's cash goes to TSMC.1

    The quarterly report states that there have been no material changes to the risk factors in the most recent annual report, so the risks this filing itself spells out sit in its notes on commitments, debt and contingencies.1

    AnalysisAnalysis: the commitment already shows in cash, through payments to secure supply and equity contributions, while the capital spending line stays low. Once the new factory runs it becomes a loading obligation, which would press on margins in a downturn.

  • Distributor orders sit one step from end demand

    With 59.3% of revenue sold through distributors, reported sales follow channel orders, which can run ahead of or behind what end customers use.

    The detail

    Distributor sales were $2,244 million against $1,498 million sold directly. The filing says distributor revenue grew faster than direct revenue over the year to date.1

    AnalysisAnalysis: for the growth to prove durable, distributor orders would have to keep tracking what end customers build rather than adding to channel stock. This quarter's filing text does not report channel inventory, so that check sits outside the figures here.

Sources

  1. 1.NXP 10-Q for the period to 2026-09-27 (the filing), Oct 27, 2026, read Nov 2, 2026
Go deeper

NXP, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What NXP's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What NXP's high margins depend on from here

    Which parts of the cost base flex with results and which stay fixed, and how the margin behaved the last time revenue turned down.

  • The capacity NXP has promised to buy

    How the foundry ventures shape capital spending and cash flow today, and the obligations that follow once the new factory starts running.

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Questions to start with
  • How much of NXP's cost growth this quarter was performance-linked pay, and how would that pay behave if revenue fell?
  • Why did NXP's free cash flow run ahead of net profit this quarter, and how much of the gap is timing?
  • What would NXP's minimum loading commitment to VSMC mean for its margins if chip demand weakened?

Business Lens describes NXP from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.