Cristiano Amon, President and CEO of Qualcomm Incorporated, speaks at a press conference during CES 2022 in Las Vegas, Nevada, USA on January 4, 2022.
Steve Marcus | Reuters
Qualcomm financial reporting third quarter earnings On Wednesday, it beat Wall Street expectations, particularly on sales, and provided strong guidance for the quarter.
Qualcomm shares initially rose as much as 7% but were flat in after-hours trading.
Here’s how Qualcomm’s performance for the quarter ended June 23 compared to LSEG’s consensus estimates:
- Earnings per share: Adjusted $2.33, expected $2.25
- income: Adjusted $9.39 billion, expected $9.22 billion
Net profit for the quarter was US$2.13 billion, or US$1.88 per share, compared with US$1.8 billion, or US$1.60 per share, in the same period last year.
Qualcomm said sales for the quarter would be between $9.5 billion and $10.3 billion, compared with Wall Street expectations of $9.71 billion. Analysts expected profit guidance of $2.45, while the company forecast $2.38 to $2.58.
Qualcomm’s largest and most important business is processors and modems for smartphones, which it calls its mobile phone business. Summer is traditionally a slower part of the annual smartphone cycle, as most new models launch in the fall.
Mobile phone sales increased 12% year over year, with revenue reaching $5.9 billion, in line with StreetAccount analysts’ estimates and indicating that the sharp decline in smartphone sales over the past two years is easing.
Qualcomm is also building its most advanced Snapdragon chips to meet the needs of “artificial intelligence smartphones” such as Recent Samsung modelswhich can run some generative artificial intelligence tasks, such as creating images.
“Artificial intelligence expands the size of the high-end market,” Qualcomm CEO Cristiano Amon said on the earnings call. “So even in a market that’s growing slowly in the low single digits, the high-end market is actually growing. Faster, we’ve seen that.”
Automotive chips are still small for Qualcomm, but the company sees putting more software and semiconductors into cars as one of its strongest opportunities for growth and diversification. Automotive revenue increased 87% year over year to $811 million. Analysts polled by StreetAccount expected the company to be valued at $641.7 million.
The company sells chips used in low-cost devices as well as Meta’s Quest headphones in a business it calls the “Internet of Things.” The product line also includes revenue from the company’s new PC chips for Windows laptops called Snapdragon X Elite, which it launched with Microsoft during the quarter.
Amon praised the release of Snapdragon X as a “milestone” in Qualcomm’s diversification efforts. Despite this, Qualcomm said IoT revenue fell 8% year-on-year to $1.4 billion, exceeding StreetAccount’s forecast of $641.7 million.
These three hardware product lines are collectively called QCT. The company’s chip business sales totaled US$8.1 billion, a 12% increase from the same period last year.
Qualcomm also charges licensing fees, reported as QTL sales, to companies that integrate 5G or other cellular technologies into its products. Licensing revenue increased only 3% year over year to $1.3 billion.
Qualcomm said it had previously received a U.S. license to export products to Huawei, but the license was revoked, which would hurt the company’s revenue.
Qualcomm said it paid $949 million in dividends during the quarter and repurchased 7 million shares for $1.3 billion.
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