Qualcomm announced its fiscal second-quarter earnings on Wednesday, surpassing the expectations set by Wall Street analysts and offering a robust outlook for the current quarter. As a result, shares surged approximately 4% in after-hours trading.
Here’s how Qualcomm performed compared to the consensus estimates for the quarter ending on March 24:
– Adjusted earnings per share: $2.44, exceeding the expected $2.32
– Adjusted revenue: $9.39 billion, slightly higher than the anticipated $9.34 billion
During the quarter, net income amounted to $2.33 billion, or $2.06 per share, compared to $1.7 billion, or $1.52 per share, in the same period the previous year.
For the current quarter, Qualcomm anticipates sales between $8.8 billion and $9.6 billion, surpassing analysts’ expectations of $9.05 billion. Analysts were also looking for earnings guidance of $2.17 per share, slightly below the company’s forecast range of $2.15 to $2.35.
During the earnings call, Qualcomm noted an expected decline in overall handset revenues by a “mid-single digit percent” in the current quarter due to a seasonal pattern of fewer summer smartphone launches.
Qualcomm’s primary business revolves around handsets, where it supplies processors, modems, and other components for smartphones, primarily Android devices but also some modem parts for iPhones. Handset sales increased by 1% year over year to $6.18 billion, indicating a potential recovery in the smartphone market following several years of post-Covid decline. Qualcomm highlighted strong demand for premium tier smartphones, particularly in China, with quarterly revenue from Chinese phone makers rising by 40% from the previous year.
The company also noted growth in its automotive business, which saw a 35% year-over-year increase to $603 million. Additionally, Qualcomm anticipates consecutive double-digit percentage growth in this division for the current quarter. However, revenue in the Internet of Things (IoT) business, which includes lower-cost chips and chips for virtual reality, declined by 11% year over year to $1.24 billion.
Qualcomm’s chip business (QCT), which encompasses handset, automotive, and IoT divisions, saw a 1% year-over-year sales increase to $8.03 billion. Meanwhile, the company’s licensing business (QTL), which collects fees from companies integrating 5G or cellular technology into their products, experienced a 2% increase to $1.32 billion compared to the previous year.
During the quarter, Qualcomm distributed $895 million in dividends and repurchased $731 million in shares. Additionally, the company raised its quarterly dividend to 85 cents from 80 cents previously.
