Qualcomm reported fourth-quarter earnings on Wednesday that beat expectations for sales and earnings, despite big year-over-year declines, and gave a strong forecast for the current quarter.
Qualcomm stock rose over 3% in extended trading.
Here’s how the chipmaker did for the third quarter per LSEG (formerly Refinitiv) consensus expectations:
- EPS: $2.02, adjusted, versus $1.91 per share expected
- Revenue: $8.67 billion, adjusted, versus $8.51 billion expected
Qualcomm said it expected adjusted earnings of between $2.25 and $2.45 per share on between $9.1 billion and $9.9 billion of sales in the current quarter, versus LSEG consensus expectations of $2.23 per share of earnings on $9.2 billion of sales.
At the midpoint of Qualcomm’s guidance, revenue will grow slightly during the current quarter compared to last year.
Net income during the quarter was $1.49 billion or $1.32 per share, a 48% decrease from last year’s $2.87 billion or $2.54 per share.
Revenue during the quarter declined 24% year-over-year from $11.39 billion last year. Overall adjusted revenue for Qualcomm’s fiscal year fell 19% from last year to $35.83 billion.
Qualcomm’s fortunes are tied to the smartphone industry, which has been in a slump for nearly two years after the Covid pandemic created a boom in sales. It makes the processors at the heart of most high-end Android devices and many lower-end phones as well.
Handset chip sales declined 27% to $5.46 billion, above Street Account expectations of $5.34 billion. They’re reported as part of QCT, Qualcomm’s biggest division that sells processors, which declined 26% to $7.37 billion in sales during the quarter.
The company’s automotive business was a bright spot for QCT, increasing 15% year-over-year to $535 million in sales during the quarter, beating Wall Street expectations. It’s still a small business but continues to grow as Qualcomm convinces more automakers and parts manufacturers to use its chips in cars.
Qualcomm’s “Internet of Things” business, which also includes the chips Meta uses in its Quest headsets, declined 31% year-over-year to $1.38 billion in revenue.
The company’s profitable licensing business, QTL, reported $1.26 billion in sales, a 12% decrease from last year, in line with Street Account expectations.
Qualcomm is eager for investors to see it as an artificial intelligence company, given that it ships chips with AI features to millions of smartphones, and could benefit from Wall Street’s recent obsession with semiconductor stocks for machine learning.
Earlier this month, it announced new Android and Windows PC chips with improved AI portions called NPUs that could generate AI images significantly faster than last year’s processors. In a statement, Qualcomm CEO Cristiano Amon drew investor attention to the company’s roadmap for “generative AI and mobile computing performance.”
Qualcomm said it spent $400 million on share repurchases and $0.9 billion on dividends during the quarter.