Qualcomm’s fiscal Q2 earnings exceeded Wall Street expectations, with adjusted earnings per share at $2.85 and revenue reaching $10.84 billion. However, the forecast for the upcoming quarter was slightly below expectations, causing a decline in share price. The company reported a net income of $2.81 billion, driven by a 12% increase in handset chip sales. Qualcomm’s automotive business surged by 59%, and its Internet of Things segment grew by 27%, emphasizing the company’s diversification strategy. CEO Cristiano Amon highlighted their robust global supply chain and plans to invest in areas promising long-term value, as they prepare for potential challenges.
Qualcomm CEO Cristiano Amon addresses an inquiry during a keynote discussion at CES 2024, the annual consumer electronics trade event, held in Las Vegas, Nevada, on January 10, 2024.
Steve Marcus | Reuters
Qualcomm announced its fiscal second-quarter results on Wednesday, surpassing Wall Street forecasts as chip sales exhibited robust year-over-year growth.
However, the company’s share value declined in after-hours trading due to a revenue forecast for the upcoming quarter that fell slightly short of expectations.
Here’s how Qualcomm performed against Wall Street predictions, based on a survey of analysts by LSEG:
- Earnings per share: $2.85 adjusted vs. $2.82 anticipated
- Revenue: $10.84 billion adjusted vs. $10.66 billion anticipated
For the current quarter, Qualcomm projected $2.70 at the midpoint for adjusted earnings per share, with $10.3 billion in revenue expected at the midpoint. Analysts from LSEG expected $2.67 in adjusted earnings and $10.35 billion in sales.
The net income for the quarter ending in March was $2.81 billion, or $2.52 per share, compared to $2.33 billion, or $2.06 per share, in the same quarter last year. Qualcomm’s adjusted figures account for acquisition-related expenses, interest costs, and share compensation.
Qualcomm noted that it does not foresee any significant impact from tariffs and had not observed increased purchasing of its products in anticipation of tariffs during the quarter.
“It’s important to note that our supply chain is highly diversified globally,” Qualcomm’s finance chief Akash Palkhiwala mentioned on the earnings call.
“During uncertain times, this is a company that has the experience to navigate challenges,” Qualcomm CEO Cristiano Amon added during the call.
Qualcomm’s primary business involves selling chips like modems and processors for smartphones, including premium devices from Samsung and Apple. Overall handset chip sales increased by 12% year-over-year to $6.93 billion. Qualcomm’s total adjusted revenue for the quarter grew by 15%.
Amon stated that the company is focusing on increasing chip sales for automotive applications, as well as for devices like Meta’s Quest virtual-reality headsets and Windows PCs under Qualcomm’s Internet of Things segment. Growth in these areas indicates the company’s efforts to diversify beyond its core smartphone market, especially as it anticipates losing Apple as a client in the near future.
“Our primary goals remain executing our diversification strategy and investing in areas that yield long-term value,” Amon declared in a statement.
Qualcomm reported a 59% growth in its automotive business year-over-year, with sales reaching $959 million. Its Internet of Things division also saw a 27% rise, generating $1.58 billion in revenue.
In total, Qualcomm’s QCT chips business increased by 18% annually, achieving $9.47 billion in revenue for the quarter.
Another major division of Qualcomm, QTL, generates profit from licensing fees for technology that Qualcomm has developed and patented. QTL revenue remained stable year-over-year at $1.32 billion.
The company announced it allocated $2.7 billion for capital returns during the quarter, which included $1.7 billion for share buybacks and $938 million for dividends.
WATCH: Microsoft surpasses revenue forecasts, Qualcomm exceeds estimates but offers cautious guidance