Bill Betz
Chief Financial Officer at NXP Semiconductors
Thank you, Kurt, and good morning to everyone on today's call. As Kurt has already covered the drivers of the revenue during Q3 and provided our revenue outlook for Q4, I will move to the financial highlights. Overall, our Q3 financial performance was good. Revenue was in line. Non-GAAP gross margin was near the low end of our guidance, more than offset by favorable operating expenses, resulting in better operating profit. Turning to Q3 specifics. Total revenue was $3.25 billion, down 5% year-on-year. We generated $1.89 billion in Non-GAAP gross profit and reported a Non-GAAP gross margin of 58.2%, down 30 basis-points year-on-year and 30 basis-points below the midpoint of our guidance range due to product mix.
Total Non-GAAP operating expenses were $738 million or 22.7% of revenue, down $65 million year-on-year, although this was $22 million below the midpoint of our guidance due to lower variable compensation, project spend, and payroll. From a total operating profit perspective, non-GAAP operating profit was $1.15 billion and non-GAAP operating margin was 35.5%, up 50 basis-points year-on-year and 40 basis-points above the midpoint of our guidance. Non-GAAP interest expenses was $70 million with taxes for ongoing operations of $182 million or 16.8% non-GAAP effective tax-rate.
Non-controlling interest was $11 million and stock-based compensation, which is not included in our non-GAAP earnings was $115 million. Taken together, we delivered non-GAAP earnings per share of $3.45, slightly ahead of our midpoint guidance of $3.42. Now, I would like to turn to the changes in our cash and debt. Our total debt at the end of Q3 was $10.18 billion with our cash balance of $3.15 billion, down $111 million sequentially due to the cumulative effect of capital returns, internal capex, investments in previously-announced equity-accounted foundry joint-ventures, and cash generation during the quarter.
The resulting net-debt was $7.03 billion and we exited the quarter with a trailing 12-month adjusted EBITDA of $5.24 billion. Our ratio of net-debt to trailing 12-month adjusted EBITDA at the end of Q3 was at 1.3 times and our 12-month adjusted EBITDA interest coverage ratio was 22.9 times. During Q3, we paid $259 million in cash dividends and repurchased $305 million of our shares. Taken together, we returned $564 million to our shareholders, representing 95% of non-GAAP free-cash flow.
In addition, on August 29, the NXB Board of Directors authorized an increase of our existing capacity to purchase an additional $2 billion of buybacks with a total balance of $2.64 billion at the end of Q3. Furthermore, since the end of Q3 and through Friday, November 1, we repurchased an additional $117 million of our shares under an established 10b5-1 program. Turning to working capital metrics, days of inventory was 149 days, an increase of one day sequentially while distribution channel inventory was 1.9 months or approximately eight weeks. Days receivable were 30 days, up three days sequentially and days payable were 60 days, a decrease of four days versus the prior quarter.
Taken together, our cash conversion cycle was 119 days, an increase of eight days versus the prior quarter. Cash flow from operations was $779 million and net capex was $186 million or 6% of revenue, resulting in non-GAAP free-cash flow of $593 million or 18% of revenue. Turning to our expectations for the fourth-quarter, as Kurt mentioned, we anticipate Q4 revenue to be $3.1 billion plus or minus about $100 million. At the midpoint, this is down 9% year-on-year and down 5% sequentially. We expect non-GAAP gross margin to be about 57.5% plus or minus 50 basis-points. Furthermore, our guidance assumes flat channel inventory at about eight weeks exiting Q4.
This reflects our continued discipline of proactively managing our distribution channel, especially during uncertain demand environments. Operating expenses are expected to be $725 million plus or minus $10 million. Taken together, we see non-GAAP operating margin to be 34.1% at the midpoint. We estimate non-GAAP financial expenses to be $77 million with the non-GAAP tax-rate to be 16.8% of profit before tax at the midpoint. Non-controlling interest and other will be $9 million. Our guidance assumes a $2 million loss from our equity-accounted boundary joint-ventures. We suggest for modeling purposes, you use an average share count of 257 million shares.
Taken together at the midpoint, this implies a non-GAAP earnings per share of $3.13. We expect stock-based compensation, which is not included in our non-GAAP guidance to be $118 million. Turning to uses of cash. We expect capital expenditures to be around 5% of revenue. We also will make a $400 million capacity access fee and a $120 million equity investment into VSMC, as well as a $52 million equity investment into ESMC, which are our two equity-accounted foundry joint-ventures, which are under construction.
In closing, I would like to highlight three items. First, we will continue to return all excess cash to our owners through buybacks and dividends. We expect our Q4 capital returns to be above $700 million. Second, despite the macro headwinds, NXP will continue to navigate and operate within its long-term financial model. And lastly, we look forward to you joining our 2024 Investor Day on Thursday, November 7th at 8:30 a.m. where we will provide an update to our long-term strategic plan and financial model. I would like to now turn it back to the operator for your questions.
