Qualcomm reported fiscal fourth-quarter results on Wednesday, beating expectations for revenue and earnings despite sharp year-over-year declines, and gave a strong forecast for the current quarter.
Qualcomm shares were up more than 3% in extended trading.
Here’s how the chipmaker did for the quarter ended September 24, according to LSEG (formerly Refinitiv) consensus expectations:
- EPS: $2.02, adjusted, vs. $1.91 expected
- Revenue: $8.67 billion, adjusted, vs. $8.51 billion expected
For the current quarter, Qualcomm said it expects adjusted earnings in the range of $2.25 to $2.45 per share on revenue of $9.1 billion to $9.9 billion, versus the LSEG consensus of $2.23 per share on revenue of $9.2 billion.
At the midpoint of Qualcomm’s guidance, adjusted revenue for the current quarter will be up slightly year-over-year.
Net income for the quarter was $1.49 billion, or $1.32 per share, down 48% from $2.87 billion, or $2.54 per share, a year ago.
Revenue for the quarter decreased 24% from $11.39 billion last year. Total adjusted revenue for Qualcomm’s fiscal year fell 19% year-on-year to $35.83 billion.
Qualcomm’s fortunes are tied to the smartphone industry, which has been in a slump for nearly two years after the Covid pandemic created a boom in sales. The company makes the processors at the heart of most high-end Android devices, as well as many lower-end phones.
“We are seeing early signs of stabilisation in demand for global 3G, 4G and 5G handsets,” Qualcomm CFO Akash Palkhiwala said on a call with analysts. He said Qualcomm expects total shipments using its handset chips to decline by a “mid- to high-single-digit percentage” year-over-year in 2023, which is better than the company previously expected.
Handset chip sales fell 27% year-on-year to $5.46 billion, beating StreetAccount expectations of $5.34 billion. These sales are reported as part of QCT, Qualcomm’s largest division that sells processors, which saw sales fall 26% to $7.37 billion.
The company’s automotive business was a bright spot for QCT, with sales up 15% year-on-year to $535 million, beating Wall Street expectations. It’s still a small business, but it’s growing as Qualcomm persuades more carmakers and suppliers to use its chips in cars.
Qualcomm’s Internet of Things business, which includes the chips Meta uses in its Quest headsets, fell 31% year-on-year to $1.38 billion in revenue.
The company’s profitable licensing business, QTL, reported revenue of $1.26 billion, down 12% year-on-year, in line with StreetAccount expectations.
Qualcomm is keen for investors to see it as an artificial intelligence company, as it ships chips with AI capabilities in millions of smartphones, and could benefit from Wall Street’s recent obsession with machine learning semiconductor stocks.
In October, Qualcomm announced new Android and Windows PC chips with improved AI parts called NPUs, which could generate AI images significantly faster than last year’s processors. In a statement, Qualcomm CEO Cristiano Amon drew investors’ attention to the company’s roadmap for “generative AI and mobile computing performance”.
Earlier this year, Qualcomm said it would continue to supply Apple with 5G modems for its handsets until 2026. Previously, analysts had suggested that Apple could be using different modems as early as this year. Palkhiwala said the new deal was similar to the company’s previous agreement with Apple.
“We are proud of our continued relationship with Apple,” Amon said.
Qualcomm said it spent $400 million on share repurchases and $893 million on dividends during the quarter.
