Qualcomm CEO Cristiano Amon answers a question during a keynote talk at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, on January 10, 2024.
Steve Marcus | Reuters
Qualcomm On Wednesday, it reported fiscal second-quarter earnings that beat Wall Street expectations and provided a strong guide for the current quarter.
Shares rose about 4% in extended trading.
Here's what happened versus LSEG's consensus estimates for the quarter ending March 24:
Earnings per share: $2.44, adjusted vs. $2.32 expected. Revenue: $9.39 billion, adjusted vs. $9.34 billion expected.
Net income during the quarter amounted to $2.33 billion, or $2.06 per share, compared to $1.7 billion, or $1.52 per share in the same period of the previous year.
Qualcomm said it expects sales of between $8.8 billion and $9.6 billion in the current quarter, higher than Wall Street's forecast of $9.05 billion. Analysts were looking for earnings guidance of $2.17 per share, versus the company's expectations of between $2.15 and $2.35.
The company said in the earnings call that it expects total phone revenue during the current quarter to decline by “mid-singles” due to fewer smartphone launches in the summer, which is a typical seasonal pattern.
Qualcomm's most important business is its phone business. It sells processors, modems and other parts for smartphones — primarily Android devices, but also some modem parts in iPhones.
Phone sales rose 1% year-on-year to $6.18 billion, indicating that the smartphone market may be recovering after a few years of post-Covid decline. Qualcomm cited strong demand for “premium-tier” smartphones that require the most advanced chips, especially in China. She said that quarterly revenues from Chinese phone manufacturers jumped by 40% compared to the same period of the previous year.
“We have not seen signs of weakness in the premium Android market in China,” Qualcomm CEO Cristiano Amon said in a call with analysts. “A lot of the power actually comes from the premium hardware found in Oppo, OnePlus and Vivo phones.”
Qualcomm calls phones using its best chips “AI smartphones,” citing features such as email completion, live translation, and virtual assistants that use the chips’ specialized NPU. One such phone is the Samsung Galaxy S24 Ultra, which was launched earlier this year.
“We are seeing the first launches of on-device AI and Gen AI in premium devices, which is resonating well with the consumer,” Amon said, adding that the company is targeting performance per watt as a key benchmark for AI.
The company's automotive business, which sells chips to automakers, also showed signs of growth, rising 35% year over year to $603 million. Qualcomm said it expects sequential double-digit growth in the division in the current quarter. Revenue in its “Internet of Things” business — low-cost chips and virtual reality chips — fell 11% year over year to $1.24 billion.
These three business lines are reported together as QCT, the company's chip business, which saw sales increase 1% year over year to $8.03 billion.
The company's licensing business, QTL, in which it collects fees from companies that want to integrate 5G or cellular technology into their products, increased 2% to $1.32 billion compared to the same period a year earlier.
Qualcomm said it paid a dividend of $895 million and repurchased shares worth $731 million during the quarter, raising its quarterly dividend to 85 cents from 80 cents previously.
