• Non-GAAP Revenue: $10.8 billion.
• Non-GAAP Earnings Per Share (EPS): $2.85.
• Chipset Business Revenue: $9.5 billion.
• Automotive Revenue Growth: 59% year-over-year.
• IoT Revenue Growth: 27% year-over-year.
• Licensing Business Revenue: $1.3 billion.
• QCT Handset Revenue: $6.9 billion, 12% year-over-year growth.
• QCT IoT Revenue: $1.6 billion, 27% year-over-year growth.
• QCT Automotive Revenue: $959 million, 59% year-over-year growth.
• QTL Revenue: $1.3 billion, EBIT margin of 70%.
• Stockholder Returns: $2.7 billion, including $938 million in dividends and $1.7 billion in stock repurchases.
• Guidance for Q3 Revenue: $9.9 billion to $10.7 billion.
• Guidance for Q3 Non-GAAP EPS: $2.60 to $2.80.
• QCT Revenue Guidance: $8.7 billion to $9.3 billion, EBIT margin of 28% to 30%.
• Non-GAAP Operating Expenses Guidance: Approximately $2.25 billion.

• Warning! GuruFocus has detected 5 Warning Signs with QCOM.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qualcomm Inc (NASDAQ:QCOM) reported non-GAAP revenues of $10.8 billion and non-GAAP earnings per share of $2.85, both exceeding the midpoint of guidance.
• The chipset business generated $9.5 billion in revenues, driven by strong performance across handsets, automotive, and IoT, with automotive and IoT revenues increasing 59% and 27% year-over-year, respectively.
• The company is making significant strides in AI, with advancements in smaller GenAI models that can run directly on devices, enhancing Qualcomm's opportunities in the AI space.
• Qualcomm Inc (NASDAQ:QCOM) is expanding its presence in the automotive sector, securing 30 new designs, including five ADAS programs, and is on track to reach $8 billion in automotive revenues by fiscal '29.
• The company is focused on growing its non-handset revenues to $22 billion by fiscal '29, with strong demand in industrial IoT and strategic acquisitions enhancing its capabilities in this area.

Negative Points

• Licensing business revenues were $1.3 billion, slightly below expectations due to lower handset units in emerging regions.
• There is uncertainty around the impact of the global trade landscape and tariffs on demand across Qualcomm Inc (NASDAQ:QCOM)'s businesses.
• The company is experiencing a decline in its share with a major US customer, expecting it to drop to approximately 70% in the upcoming product launch.
• Gross margins in the chipset segment were slightly down due to mix across tiers and segments, impacting profitability.
• Discussions with Huawei regarding royalty revenue remain ongoing with no significant updates, reflecting challenges in negotiations.

Q & A Highlights

Q: Could you discuss the assumptions in your guidance for the handset market, especially concerning tariff-related impacts and order patterns from your largest customer? A: Akash Palkhiwala, CFO and COO, stated that their guidance reflects the current assessment of the financial impact of tariffs, with no material direct impact observed. The supply chain's global diversification helps navigate potential challenges. There have been no significant pull-ins from customers, indicating consistent ordering patterns.

Q: Any updates on Huawei royalty revenue negotiations, given the challenging backdrop? A: Alexander Rogers, President of QTL and Global Affairs, mentioned that discussions are ongoing, but there are no updates to share at this time.

Q: What drove the upside in the IoT segment, and is there evidence of demand pull-forward? A: Akash Palkhiwala highlighted significant growth across consumer, networking, and industrial IoT, with industrial being the largest contributor. The transition from microcontrollers to microprocessors and AI is benefiting Qualcomm's technology portfolio, and no material demand pull-forward was observed.

Q: Can you elaborate on your M&A strategy, particularly regarding recent acquisitions like Focus AI and Edge Impulse? A: Cristiano Amon, CEO, explained that these acquisitions aim to enhance Qualcomm's IoT space, especially in industrial applications. The focus is on building a scalable software platform to leverage advanced computing and AI at the edge.

Q: How do you view the competitive landscape in smartphones, particularly concerning high-end competition and potential threats from CSS designs? A: Cristiano Amon stated that the competitive landscape remains unchanged, with stable relationships with key customers like Samsung. The competition in China is primarily between Qualcomm and MediaTek, with the premium tier expanding, allowing room for both players.

Q: What are the growth drivers for the automotive segment, and when will ADAS become a more significant contributor? A: Cristiano Amon noted that growth is driven by increased digital cockpit and compute content, with ADAS designs gaining traction. Akash Palkhiwala added that Qualcomm is well-positioned in the transforming auto market, benefiting from increased silicon content in new vehicle types.

Q: How does the decline in market share at your US customer affect OpEx and Qualcomm's margin structure? A: Akash Palkhiwala explained that Qualcomm's strategy is to maintain OpEx investment levels while transitioning focus from handsets to growth areas like automotive, PC, XR, and industrial IoT. The targets set at Investor Day aim to replace revenue from declining Apple business.

Q: What prompted the decision to return 100% of free cash flow to shareholders? A: Akash Palkhiwala mentioned that strong cash flow and a growing cash balance allowed Qualcomm to increase buybacks while maintaining strategic flexibility for M&A. The decision aligns with the framework outlined at Investor Day.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.