Qualcomm chairman and CEO Cristiano Amon speaks at a press conference during CES 2022 in Las Vegas, Nevada, U.S., January 4, 2022.
Steve Marcus | Reuters
Qualcomm reported fiscal third quarter earnings on Wednesday that beat Wall Street expectations, particularly for sales, and provided strong guidance for the current quarter.
Qualcomm stock fell 1% in extended trading after initially rising 7% at one point.
Here’s how Qualcomm did compared to LSEG’s estimates for the quarter ended June 23:
- earnings per share: $2.33 adjusted vs. $2.25 expected
- Income: $9.39 billion adjusted vs. $9.22 billion expected
Net income during the quarter was $2.13 billion, or $1.88 per share, compared with $1.8 billion, or $1.60 per share, in the year-ago period.
Qualcomm said it expects sales of between $9.5 billion and $10.3 billion in the current quarter, compared with Wall Street expectations of $9.71 billion. Analysts were looking for guidance for earnings per share of $2.45, versus the company’s forecast of between $2.38 and $2.58.
Qualcomm’s biggest and most important business is making processors and modems for smartphones, which it calls the phone business. The summer months are traditionally a slower part of the annual smartphone cycle because most new models are released in the fall.
Device sales rose 12 percent from the previous period to $5.9 billion in revenue, according to StreetAccount analyst estimates, suggesting the deep decline in smartphone sales over the past two years is receding.
Qualcomm also frames the most advanced Snapdragon chips as necessary for “smart artificial smartphones,” such as recent Samsung modelswhich can perform some productive AI tasks such as image generation.
“Artificial intelligence has expanded the size of the premium tier,” Qualcomm CEO Cristiano Amon said on the earnings call. “So even in a market that’s kind of flat to low single digits in growth, the premium tier is actually growing faster and we’ve seen that.”
Automotive chips remain a small part of Qualcomm’s overall revenue stream, but the company sees putting more software and semiconductors into cars as one of its best opportunities for future growth and diversification. Auto revenue rose 87% year over year to $811 million. Analysts polled by StreetAccount were looking for $641.7 million.
The company sells chips for low-cost devices as well as Meta’s Quest headsets in a business it calls the “Internet of Things.” The line also includes revenue from the company’s new PC chip for Windows laptops, called Snapdragon X Elite, which was launched with Microsoft during the quarter.
Amon hailed the Snapdragon X launch as a “milestone” in Qualcomm’s efforts to diversify. However, Qualcomm said IoT revenue fell 8% year over year to $1.4 billion. But that beat StreetAccount expectations of $641.7 million.
These three hardware lines are collectively referred to as QCT, the company’s chip business, which collectively reported sales of $8.1 billion, up 12% year-over-year.
Qualcomm also collects licensing fees from companies that incorporate 5G or other mobile technologies into their products, referred to as QTL sales. Licensing revenue rose 3% to $1.3 billion.
Qualcomm said it previously had a U.S. license to export its products to Huawei, but that the license was revoked and would hurt the company’s revenue.
The company said it paid $949 million in dividends and repurchased 7 million shares for $1.3 billion during the quarter.
