TE Connectivity plc stock research
FY2023 Q4
TE Connectivity (TEL) Gross Margin — Quarter Ended Sep 29, 2023
Revenue was stable compared to the prior quarter, while gross profit remained level and cost of revenue increased slightly, resulting in a lower gross margin. Versus the same quarter last year, revenue was lower and cost of revenue decreased, but gross profit was unchanged, leading to a higher gross margin.
Gross margin takeaway
Quarter ended Sep 29, 2023 · FY2023 Q4
Revenue was stable compared to the prior quarter, while gross profit remained level and cost of revenue increased slightly, resulting in a lower gross margin. Versus the same quarter last year, revenue was lower and cost of revenue decreased, but gross profit was unchanged, leading to a higher gross margin.
- The strongest observable margin driver is the relationship between cost of revenue and revenue. In the current quarter, cost of revenue increased relative to the prior quarter while revenue was unchanged, which directly weakened gross margin.
- Compared to the immediately preceding quarter, gross margin weakened as cost of revenue rose while revenue was flat. Compared to the same quarter one year earlier, gross margin improved, driven by a larger reduction in cost of revenue relative to the decline in revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
31.8%
Gross profit
$1.3B
Revenue
$4.0B
Cost of revenue
$2.8B
Quarter-over-quarter change
-0.6 pts
Year-over-year change
+0.9 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $4.2B | $1.3B | $2.9B | 30.9% |
| Jun 30, 2023 | $4.0B | $1.3B | $2.7B | 32.5% |
| Sep 29, 2023 | $4.0B | $1.3B | $2.8B | 31.8% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2023
-0.6 pts
Year-over-year change
Sep 30, 2022
+0.9 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the relationship between cost of revenue and revenue. In the current quarter, cost of revenue increased relative to the prior quarter while revenue was unchanged, which directly weakened gross margin.
Compared to the immediately preceding quarter, gross margin weakened as cost of revenue rose while revenue was flat. Compared to the same quarter one year earlier, gross margin improved, driven by a larger reduction in cost of revenue relative to the decline in revenue.
Monitor the trajectory of cost of revenue relative to revenue, as its increase in the current quarter was the primary factor behind the sequential margin decline.