Key Points
- Revenue for the fiscal third quarter totaled $9.4 billion, up 11%.
- Non-GAAP earnings per share came in at $2.33, up 25%.
- The automotive segment saw stellar performance, up 87%.
Qualcomm (QCOM -0.55%), a global leader in wireless technology, released its fiscal 2024 third-quarter results on July 31.
Revenue for the quarter totaled $9.39 billion, an 11% increase from $8.45 billion in the year-ago quarter. This was towards the higher end of management’s guidance range of $8.8 billion to $9.6 billion. The company also reported per share (EPS) of $2.33, up 25% year-over-year from $1.87 in Q3 2023, surpassing the expected range of $2.15 to $2.35.
The overall performance indicates a robust quarter for Qualcomm, driven by substantial gains in its key business segments.
| Metric | Q3 Fiscal 2024 | Management Guidance | Q3 Fiscal 2023 | YoY Change |
|---|---|---|---|---|
| Revenue (in billions) | $9.39 | $8.8 - $9.6 | $8.45 | +11% |
| GAAP earnings per share | $1.88 | $1.74 - $1.94 | $1.60 | +18% |
| Non-GAAP earnings per share | $2.33 | $2.15 - $2.35 | $1.87 | +25% |
| QCT segment revenue (in billions) | $8.07 | $7.5 - $8.1 | $7.17 | +12% |
| QTL segment revenue (in billions) | $1.27 | $1.2 - $1.4 | $1.23 | +3% |
| Source: Expectations based on management's guidance, as provided in 2024-05-01 earnings report. |
Understanding Qualcomm's Business
Qualcomm is a leader in developing and licensing wireless technology. The company's technology is essential in mobile, automotive, and IoT (Internet of Things) sectors. Qualcomm's business primarily revolves around its Snapdragon integrated circuits, which fuel mobile devices and automotive systems. It also holds a substantial intellectual property portfolio, licensing its patented technology to manufacturers worldwide. The company's focus areas include advancing wireless tech (like 5G and 6G), AI, and automotive innovations.
Recently, Qualcomm has concentrated on expanding its automotive and IoT segments. Key to its business success are continued high investments in R&D, ensuring it stays at the forefront of technological advancements. For instance, the company spent $2.26 billion on R&D in Q3, slightly up from $2.22 billion the previous year. This investment backs innovations like the Snapdragon X Series solutions for PCs, positioning Qualcomm as a frontrunner in intelligent computing.
Quarterly Highlights
In Q3, Qualcomm's revenue reached $9.4 billion, up 11% from a year ago. This figure landed toward the higher end of the company's guidance.
The QCT (Qualcomm CDMA Technologies) segment reported $8.07 billion in revenue, a 12% increase year over year, driven by a 12% rise in handset revenue to $5.9 billion and an 87% increase in automotive revenue to $811 million. However, IoT revenue in QCT declined by 8% to $1.36 billion, reflecting ongoing economic challenges.
The Qualcomm Technology Licensing (QTL) segment saw revenue of $1.27 billion, up from $1.23 billion in the previous year, positioning it comfortably within the expected range.
The company's third-quarter EPS based on generally accepted accounting principles (GAAP) stood at $1.88, marking an 18% increase, while its Non-GAAP EPS was $2.33, a 25% rise from Q3 2023. This exceeded the higher end of management’s anticipated EPS range.
Financial performance improvements were notable beyond revenue and earnings. The company's GAAP EBT (earnings before taxes) increased by 30% year over year to $2.28 billion. Net income came in at $2.13 billion, an 18% gain from the year-ago period, effectively reflecting the profitability improvements across its segments.
Qualcomm's automotive segment was a standout performer. This growth aligns with booming automotive connectivity and digitalization trends. On the other hand, the IoT segment faced macroeconomic pressures, leading to an 8% decline in revenue to $1.36 billion. Despite this, the company remains committed to innovation in IoT, which is expected to rebound as economic conditions stabilize.
The company returned $2.3 billion to stockholders during the quarter, comprising $949 million in dividends and $1.3 billion in share repurchases, reflecting its strong cash flow management and commitment to shareholder returns.
Looking Ahead
For the fourth quarter of fiscal 2024, Qualcomm projects a revenue range of $9.5 billion to $10.3 billion, reflecting continued confidence in its operational momentum. GAAP diluted EPS is anticipated to range between $2.38 and $2.58, while non-GAAP EPS is expected to be between $2.45 and $2.65. Notably, the QCT revenue guidance stands between $8.1 billion and $8.7 billion, and QTL revenue is expected to be in the $1.35 billion to $1.55 billion range.
Investors should keep an eye on Qualcomm's strategic focuses moving forward, particularly on the expansion of its automotive and IoT markets and the evolving developments in AI-integrated products. Further, Qualcomm’s reliance on major customers like Apple (AAPL -1.20%) and Samsung (SSNL.F 9.01%) remains a critical factor to monitor as it impacts a substantial portion of the company's revenue stability. The company’s ongoing innovations, especially in AI and next-gen wireless technologies, remain pivotal to sustaining its market leadership.
