Qualcomm sales rise 37% despite ‘challenging macroeconomic environment’

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

Qualcomm inventory fell greater than 4% in prolonged buying and selling.

This is how Qualcomm fared towards Refinitiv consensus expectations:

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

Qualcomm mentioned it expects earnings per share of between $3 and $3.30 within the fourth quarter on gross sales of between $11 billion and $11.8 billion, which is under Wall Road expectations. in fourth-quarter earnings of $3.23 per share and $11.87 billion in gross sales.

Qualcomm CEO Cristiano Amon mentioned in a press release that the corporate’s outcomes have been sturdy regardless of a “difficult macroeconomic setting”. Qualcomm’s gross sales elevated 37% within the quarter.

Qualcomm’s largest line of enterprise is promoting processors and modems for smartphones. The corporate’s handset enterprise grew 59% 12 months on 12 months within the quarter to $6.15 billion, regardless of indicators that smartphone gross sales might already be slowing on account of macroeconomic situations such because the ‘inflation.

However Qualcomm’s forecast suggests the corporate’s handset gross sales progress will gradual in its fourth fiscal quarter, reflecting {that a} drop in demand for smartphones may hit its core enterprise each when it comes to income and revenue. . The corporate expects working bills to extend between 6% and eight% sequentially within the quarter.

Qualcomm chief monetary officer Akash Palkhiwala mentioned the corporate’s anticipated fourth-quarter weak spot in smartphone chip gross sales can be within the mid-to-lower tier, versus chips for the costliest telephones.

Qualcomm mentioned it was nonetheless on the right track to develop its handset enterprise barely under 50% this 12 months because of dearer chips.

Handsets are reported underneath a unit referred to as QCT together with different semiconductors bought by Qualcomm, corresponding to RF front-end, chips for automobiles and low-power chips for linked gadgets. This phase grew by 45% on an annual foundation to achieve $9.38 billion. Handsets have been the phase’s quickest rising enterprise regardless of latest efforts by Qualcomm to diversify into different chip varieties.

Qualcomm has introduced a partnership with Samsung via 2030 that features patent licensing and the availability of Snapdragon processors for handsets. Samsung is the world’s largest smartphone maker on a unit foundation.

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

QTL, Qualcomm’s different main unit that features license charges for 5G and different applied sciences manufactured by the corporate, reported income of almost $1.52 billion, a rise 2% yearly. It hasn’t seen sturdy progress in recent times however stays a serious supply of revenue for the chipmaker.

The corporate’s gross margin fell wanting expectations as chip prices rise on account of shortages and points with Chinese language manufacturing. Qualcomm has outsourced its chip manufacturing to foundries which have had sturdy backlogs for the reason that pandemic started. Qualcomm introduced a gross margin of 56% towards a consensus estimate of 57.8%.

Qualcomm mentioned it spent $1.3 billion in shareholder returns through the quarter, together with $842 million in dividends.