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 fell 1% in intraday trading after rising as much as 7%.
Here’s how Qualcomm compares with LSEG’s forecasts for the quarter ending June 23:
- Earnings per share: Adjusted $2.33, expected $2.25
- income: Adjusted US$9.39 billion, expected US$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, a year earlier.
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 earnings guidance of $2.45 per share, while the company forecast $2.38 to $2.58.
Qualcomm’s largest and most important business is making smartphone processors and modems, 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 rose 12% from a year earlier, 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 still make up a small part of Qualcomm’s total revenue stream, but the company sees putting more software and semiconductors into cars as one of its best opportunities for future growth and diversification. Automotive business revenue increased 87% year-on-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 used in Windows laptops, Called Snapdragon X Elitewhich launched this quarter with Microsoft.
Amon praised the release of Snapdragon X as a “milestone” in Qualcomm’s diversification efforts. However, Qualcomm said that IoT revenue fell by 8% year-on-year to US$1.4 billion. But it beat 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 grew 3% 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.
The company said it paid $949 million in dividends during the quarter and repurchased 7 million shares for $1.3 billion.
