NXP delivered revenue of $2.39 billion, a decline of 3% year on year, and up 8% as compared to the prior quarter, with the annual period comparison impacted by the successful divestment of the Standard Products business during the first quarter of 2017. HPMS segment revenue was $2.29 billion, an increase of 9% on both a year on year, and on a sequential basis.
Within the Automotive group, third quarter revenue was $948 million, up 11% year on year. Within the Secure Connected Devices group, third quarter revenue was $713 million, up 20% year on year driven by demand for both mobile transaction and general purpose MCU products.
In the Secure Interface and Infrastructure group, third quarter revenue was $488 million, up 3% year on year, driven by the Interface group, offset primarily by year-on-year declines within the legacy product portfolio of the Digital Networking group. Lastly, in Secure Identification Solutions group, third quarter revenue was $139 million, down 22% versus the same period a year ago.
A year ago, NXP announced the transaction with Qualcomm. At the time, NXP highlighted that the deal at $110 given the benefits to all shareholders and other stakeholders was a compelling deal for NXP and would close significant strategic gaps in both the Automotive and IOT space. NXP continues to support and recommend the $110 Qualcomm offer for acceptance to NXP shareholders.
“We believe that working together with Qualcomm, given the complimentary product portfolios of the combined company, will enable us to better support our customers’ long term requirements in both autonomous driving and secure IoT. We are working diligently with Qualcomm and the various regulators towards a successful close this year. However, at this point the timetable is very tight and there is a possibility for the closing to occur in early 2018,” said Richard Clemmer, NXP CEO.
“In the third quarter, our GAAP operating margin was 6.8%, a 20-basis point decline from the third quarter of 2016 due to the divestment of our Standard Products business. Our non-GAAP operating margin was 30.8%, representing a 280-basis point improvement compared to the third quarter of 2016 and a 240-basis point improvement sequentially. And finally, due to lower gross debt and cash generation in the quarter, our overall financial leverage was reduced to 1.1x,” said Peter Kelly, NXP CFO.
Total gross debt was $6.56 billion, essentially flat on a sequential basis. Cash was $3.06 billion, an increase from the $2.64 billion in the second quarter, resulting in net debt of $3.49 billion, a decline from the $3.91 billion in the second quarter. Trailing twelve months, adjusted EBITDA was $3.12 billion, an increase from $3.07 billion in the second quarter. Cash flow from operations was $643 million, an increase from the $441 million in the second quarter.