NXP Semiconductors NV (NXPI.US) reported third-quarter results indicating a further slowdown in its revenue decline, with better-than-expected guidance suggesting a return to positive growth in the fourth quarter.

The company's Q3 revenue fell 2% year-over-year to $3.17 billion, slightly above analysts' average estimate of $3.16 billion, marking a smaller decline compared to the 6% drop in Q2. Adjusted operating profit stood at $1.07 billion, down 7% YoY (versus a 13% decline in Q2), while adjusted EPS of $3.11 missed the consensus estimate of $3.12.

Notably, automotive chips accounted for nearly 60% of NXP's Q3 revenue. The segment halted a five-quarter streak of YoY declines in Q2 and maintained flat growth YoY in Q3. Sequentially, automotive revenue rose 6% in Q3—double the Q2 growth rate.

Meanwhile, industrial and IoT revenue grew 3% YoY, and mobile revenue increased 6%, reversing Q2's downtrend.

The Dutch semiconductor supplier, serving automotive and industrial clients, issued an upbeat outlook, signaling recovery from weak demand and trade war uncertainties. It expects Q4 revenue between $3.2 billion and $3.4 billion, surpassing analysts' estimates near the lower end. The entire guidance range exceeds last year's level, implying NXP's first YoY revenue growth since Q1 2023. Adjusted EPS is projected at $3.07–$3.49.

Post-pandemic, automakers and other clients overstocked chips, prolonging oversupply. Geopolitical uncertainties also delayed corporate spending. However, NXP previously noted that automotive chip oversupply may finally ease this year, with its "rapidly growing" auto business "accelerating meaningfully."

The guidance suggests NXP is outperforming expectations amid trade tensions and industry-wide inventory corrections. Incoming CEO Rafael Sotomayor stated, "Our outlook reflects strong execution of company-specific growth drivers and early signs of cyclical recovery."