August 10, 2022

Qualcomm president and CEO Cristiano Amon speaks about Qualcomm’s technologies for automakers at a news meeting through CES 2022 in Las Vegas, Nevada, January 4, 2022.

Steve Marcus | Reuters

Qualcomm documented third-quarter earnings following the bell on Wednesday, slightly beating Wall Avenue estimates, but direction for the existing quarter was shorter of consensus anticipations.

Qualcomm stock dropped around 4% in prolonged trading.

Below is how Qualcomm did as opposed to Refinitiv consensus anticipations:

  • EPS: $2.96, modified, compared to $2.87 expected, up 53% yr-more than-calendar year.
  • Earnings: $10.93 billion, adjusted, compared to $10.88 billion anticipated, up 37% yr-more than-year.

Qualcomm reported it expected involving $3 and $3.30 in earnings for every share throughout the fourth quarter on among $11 billion and $11.8 billion in income, falling limited of Wall Street’s Q4 earnings expectations of $3.23 for each share and $11.87 billion in revenue.

Qualcomm CEO Cristiano Amon said in a assertion that the firm’s results had been sturdy irrespective of currently being in a “difficult macroeconomic setting.” Qualcomm gross sales rose 37% through the quarter.

Qualcomm’s major line of small business is marketing processors and modems for smartphones. The firm’s handset small business grew 59% on an yearly foundation for the duration of the quarter to $6.15 billion, despite symptoms that smartphone revenue may possibly be now slowing down thanks to macroeconomic situations these as inflation.

But Qualcomm’s forecast instructed that the firm’s handset gross sales advancement would slow in the course of its fiscal fourth quarter, reflecting that a drop in smartphone demand from customers could strike its key enterprise both equally in terms of profits and earnings. The corporation expects operating bills to increase among 6% and 8% sequentially during the quarter.

Qualcomm CFO Akash Palkhiwala mentioned that the firm’s expected fourth-quarter weak point in smartphone chip product sales would be in the middle and decreased tiers, as opposed to chips for the most pricey phones.

Qualcomm claimed it is really nevertheless on rate for its handset business to develop a little bit beneath 50% this year many thanks to far more high-priced chips.

Handsets are documented less than a device called QCT along with the other semiconductors Qualcomm sells, like RF entrance stop, chips for autos and very low-power chips for connected units. That phase grew 45% on an once-a-year foundation to $9.38 billion. Handsets were the fastest increasing company in the segment inspite of Qualcomm’s current initiatives to diversify into other forms of chips.

Qualcomm introduced a partnership with Samsung by means of 2030 that includes patent licensing and giving Snapdragon processors for handsets. Samsung is the leading smartphone manufacturer in the planet on a unit basis.

Automotive chips grew 38% on an yearly basis to $350 million, an all-time-high for Qualcomm, suggesting it really is nonetheless a smaller company when compared to Qualcomm’s other strains. Qualcomm’s IoT small business, which would make lower-energy chips for linked products, grew 31% to $1.83 billion.

QTL, the other big Qualcomm unit which is comprised of licensing fees associated to 5G and other systems the firm can make, claimed just about $1.52 billion in profits, a 2% yearly increase. It hasn’t been increasing strongly in the latest yrs but remains a important supply of revenue for the chipmaker.

The company’s gross margin arrived up limited of expectations as chip expenses rise owing to shortages and problems with Chinese production. Qualcomm outsources its chip production to foundries that have been booked stable considering that the commence of the pandemic. Qualcomm documented a 56% gross margin as opposed to a consensus estimate of 57.8%.

Qualcomm claimed it expended $1.3 billion on shareholder return for the duration of the quarter, including $842 million of dividends.