Qualcomm Exceeds Earnings Estimates but Forecasts Lower Revenue

Qualcomm announced its fiscal second-quarter earnings on Wednesday, surpassing Wall Street expectations with strong growth in chip sales. However, the company's share price dipped in extended trading due to a revenue forecast that was slightly below analyst projections. Here’s how Qualcomm’s performance stacks up against Wall Street's expectations: In the current quarter, Qualcomm anticipates adjusted earnings per share (EPS) of $2.70 on revenue of $10.3 billion, based on the midpoint of its guidance. Analysts surveyed by LSEG, however, were expecting $2.67 in EPS and $10.35 billion in revenue. For the quarter ending in March, Qualcomm’s net income reached $2.81 billion, or $2.52 per share, up from $2.33 billion, or $2.06 per share, in the same period last year. The company's adjusted results excluded charges related to acquisitions, interest expenses, and stock compensation. Qualcomm’s CFO, Akash Palkhiwala, addressed concerns about tariffs during the earnings call, stating that the company does not expect a significant impact given its diversified global supply chain. "We navigate these times with a wealth of experience in managing uncertainty," added CEO Cristiano Amon. The bulk of Qualcomm’s revenue comes from selling chips for smartphones, particularly high-end models produced by brands like Samsung and Apple. Handset chip sales surged 12% year-over-year to $6.93 billion. Overall, the company’s adjusted revenue grew 15%. To reduce reliance on the smartphone market, Qualcomm has been expanding into other sectors. Amon highlighted ongoing efforts to secure more chip sales for the automotive industry, virtual reality devices like Meta’s Quest headsets, and Windows PCs through its Internet of Things (IoT) business. This diversification is crucial as the company prepares for a potential decline in business with Apple in the coming years. Sales in the automotive segment jumped 59% year-over-year to $959 million, while the IoT business grew 27% to reach $1.58 billion in revenue. These gains underscore Qualcomm's success in broadening its market base. The QCT chips business, which encompasses these areas, saw an 18% increase to $9.47 billion in revenue. Meanwhile, Qualcomm's QTL division, responsible for licensing fees, reported revenue of $1.32 billion, unchanged from the previous year. Despite this flat performance, the licensing arm remains a significant contributor to the company’s profitability. During the quarter, Qualcomm committed $2.7 billion to capital returns, including $1.7 billion in share repurchases and $938 million in dividends, further demonstrating its financial strength and commitment to shareholder value. In a statement, Amon reiterated the company’s focus on diversification and long-term investment. “Our top priorities remain executing our diversification strategy and continuing to invest in areas that drive long-term value,” he said. The earnings report and forward-looking guidance paint a picture of a resilient and strategic company that is navigating challenges while positioning itself for future growth across multiple industries. Although the near-term outlook may be slightly cautious, Qualcomm’s robust performance and proactive stance suggest a continued strong presence in the tech landscape.