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Qualcomm (QCOM) earnings Q3 2022

Qualcomm president and CEO Cristiano Amon speaks about Qualcomm’s expertise for automakers at a information convention throughout CES 2022 in Las Vegas, Nevada, January 4, 2022.

Steve Marcus | Reuters

Qualcomm reported third-quarter earnings after the bell on Wednesday, barely beating Wall Road estimates, however steerage for the present quarter was in need of consensus expectations.

Qualcomm inventory dropped over 4% in prolonged buying and selling.

Right here is how Qualcomm did versus Refinitiv consensus expectations:

  • EPS: $2.96, adjusted, versus $2.87 anticipated, up 53% year-over-year.
  • Income: $10.93 billion, adjusted, versus $10.88 billion anticipated, up 37% year-over-year.

Qualcomm stated it anticipated between $3 and $3.30 in earnings per share through the fourth quarter on between $11 billion and $11.8 billion in gross sales, falling in need of Wall Road’s This fall earnings expectations of $3.23 per share and $11.87 billion in gross sales.

Qualcomm CEO Cristiano Amon stated in an announcement that the corporate’s outcomes had been robust regardless of being in a “difficult macroeconomic atmosphere.” Qualcomm gross sales rose 37% through the quarter.

Qualcomm’s largest line of enterprise is promoting processors and modems for smartphones. The corporate’s handset enterprise grew 59% on an annual foundation through the quarter to $6.15 billion, regardless of indicators that smartphone gross sales is perhaps already slowing down attributable to macroeconomic circumstances similar to inflation.

However Qualcomm’s forecast prompt that the corporate’s handset gross sales development would sluggish throughout its fiscal fourth quarter, reflecting {that a} decline in smartphone demand might hit its important enterprise each when it comes to income and earnings. The corporate expects working bills to rise between 6% and eight% sequentially through the quarter.

Qualcomm CFO Akash Palkhiwala stated that the corporate’s anticipated fourth-quarter weak spot in smartphone chip gross sales can be within the center and decrease tiers, versus chips for the most costly telephones.

Qualcomm stated it is nonetheless on tempo for its handset enterprise to develop barely beneath 50% this 12 months due to costlier chips.

Handsets are reported underneath a unit known as QCT together with the opposite semiconductors Qualcomm sells, like RF entrance finish, chips for automobiles and low-power chips for related gadgets. That section grew 45% on an annual foundation to $9.38 billion. Handsets had been the quickest rising enterprise within the section regardless of Qualcomm’s current efforts to diversify into different kinds of chips.

Qualcomm introduced a partnership with Samsung through 2030 that features patent licensing and supplying Snapdragon processors for handsets. Samsung is the highest smartphone producer on the planet on a unit foundation.

Automotive chips grew 38% on an annual foundation to $350 million, an all-time-high for Qualcomm, suggesting it is nonetheless a small enterprise in comparison with Qualcomm’s different strains. Qualcomm’s IoT enterprise, which makes low-power chips for related gadgets, grew 31% to $1.83 billion.

QTL, the opposite main Qualcomm unit that is comprised of licensing charges associated to 5G and different applied sciences the corporate makes, reported practically $1.52 billion in gross sales, a 2% annual rise. It hasn’t been rising strongly lately however stays a serious supply of revenue for the chipmaker.

The corporate’s gross margin got here up in need of expectations as chip prices rise attributable to shortages and points with Chinese language manufacturing. Qualcomm outsources its chip manufacturing to foundries which were booked strong for the reason that begin of the pandemic. Qualcomm reported a 56% gross margin versus a consensus estimate of 57.8%.

Qualcomm stated it spent $1.3 billion on shareholder return through the quarter, together with $842 million of dividends.

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