Qualcomm (QCOM) earnings report This autumn 2023

Qualcomm reported fiscal fourth-quarter earnings on Wednesday that beat expectations for gross sales and earnings, regardless of massive year-over-year declines, and gave a robust forecast for the present quarter.

Qualcomm inventory rose over 3% in prolonged buying and selling.

This is how the chipmaker did for the quarter ended Sept. 24 per LSEG (previously Refinitiv) consensus expectations:

• EPS: $2.02, adjusted, vs. $1.91 anticipated
• Income: $8.67 billion, adjusted, vs. $8.51 billion anticipated

Qualcomm stated it anticipated adjusted earnings of between $2.25 and $2.45 per share on between $9.1 billion and $9.9 billion of gross sales within the present quarter, versus LSEG consensus expectations of $2.23 per share of earnings on $9.2 billion of gross sales.

On the midpoint of Qualcomm’s steering, adjusted income will develop barely throughout the present quarter in comparison with final yr.

Web earnings throughout the quarter was $1.49 billion or $1.32 per share, a 48% lower from final yr’s $2.87 billion or $2.54 per share.

Income throughout the quarter declined 24% yr over yr from $11.39 billion final yr. Total adjusted income for Qualcomm’s fiscal yr fell 19% from final yr to $35.83 billion.

Qualcomm’s fortunes are tied to the smartphone business, which has been in a droop for almost two years after the Covid pandemic created a increase in gross sales. The corporate makes the processors on the coronary heart of most high-end Android units and plenty of lower-end telephones as effectively.

“We’re seeing early indicators of stabilization in demand for international 3G, 4G, 5G handsets,” Qualcomm finance chief Akash Palkhiwala stated on a name with analysts. He stated Qualcomm expects whole shipments utilizing its handset chips to say no “mid- to excessive single-digit proportion” in 2023 versus final yr, which is best than the corporate had beforehand anticipated.

Handset chip gross sales declined 27% to $5.46 billion, above StreetAccount expectations of $5.34 billion, from the year-earlier interval. These gross sales are reported as a part of QCT, Qualcomm’s greatest division that sells processors, which declined 26% to $7.37 billion in gross sales.

The corporate’s automotive enterprise was a vivid spot for QCT, growing 15% yr over yr to $535 million in gross sales, beating Wall Road expectations. It is nonetheless a small enterprise however continues to develop as Qualcomm convinces extra automakers and elements producers to make use of its chips in vehicles.

Qualcomm’s “Web of Issues” enterprise, which additionally contains the chips Meta makes use of in its Quest headsets, fell 31% yr over yr to $1.38 billion in income.

The corporate’s worthwhile licensing enterprise, QTL, reported $1.26 billion in gross sales, a 12% lower from final yr, in step with StreetAccount expectations.

Qualcomm is raring for traders to see it as a synthetic intelligence firm, on condition that it ships chips with AI options to tens of millions of smartphones, and may gain advantage from Wall Road’s latest obsession with semiconductor shares for machine studying.

In October, Qualcomm announced new Android and Windows PC chips with improved AI parts referred to as NPUs that would generate AI photos considerably sooner than final yr’s processors. In a press release, Qualcomm CEO Cristiano Amon drew investor consideration to the corporate’s highway map for “generative AI and cellular computing efficiency.”

Earlier this yr, Qualcomm stated it might proceed to produce Apple with 5G modems for handsets via 2026. Beforehand, analysts had instructed that Apple might use totally different modems as quickly as this yr. Palkhiwala stated the brand new deal was much like its earlier settlement with Apple.

“We’re pleased with our ongoing relationship with Apple,” Amon stated.

Qualcomm stated it spent $400 million on share repurchases and $893 million on dividends throughout the quarter.