Qualcomm reported strong second-quarter earnings that exceeded Wall Street expectations, leading to a 4% rise in shares in extended trading. The company’s earnings per share were $2.44 adjusted, higher than the $2.32 expected, while revenue reached $9.39 billion adjusted, surpassing the $9.34 billion expected. Net income for the quarter was $2.33 billion, or $2.06 per share, compared to $1.7 billion, or $1.52 per share, in the same period last year. For the current quarter, Qualcomm forecasted sales between $8.8 billion and $9.6 billion, which were above Wall Street estimates of $9.05 billion. The company also provided earnings guidance ranging from $2.15 to $2.35 per share.
Qualcomm’s handset business, which includes selling processors, modems, and other parts for smartphones, experienced a 1% year-over-year increase to $6.18 billion in revenue. This growth suggests a potential recovery in the smartphone market after years of post-covid sluggishness. The company noted strong demand for “premium tier” smartphones that require advanced chips, especially in China. Qualcomm highlighted a 40% annual revenue increase from Chinese phone makers during the quarter, emphasizing the popularity of phones using its best chips branded as “AI-powered smartphones.” Qualcomm mentioned specific features such as generative email completion, live translation, and virtual assistants powered by the chips’ specialized “NPU” AI section, including the Samsung Galaxy S24 Ultra.
In addition to the handset business, Qualcomm’s automotive segment, which supplies chips to automakers, saw a notable surge of 35% to $603 million in revenue. On the other hand, the company’s Internet of Things business, which consists of lower-cost chips and virtual reality chips, fell 11% year-over-year to $1.24 billion. These three business lines are grouped as QCT, the company’s core chip business, which recorded a 1% increase in sales to $8.03 billion. Qualcomm also highlighted its licensing business, QTL, which increased 2% year-over-year to $1.32 billion, representing fees from companies integrating 5G or cellular technology.
During the quarter, Qualcomm distributed $895 million in dividends and repurchased $731 million in shares. The company raised its quarterly dividend to 85 cents from 80 cents previously, showcasing confidence in its financial position and future growth prospects. Qualcomm’s strong performance in its key business segments, including handsets, automotive, and licensing, reflects its continued innovation and market demand for advanced technologies. The company’s positive outlook for the current quarter further solidifies its position as a leading provider of essential components for smartphones and other connected devices. Overall, Qualcomm’s robust financial results and strategic initiatives demonstrate its resilience and competitiveness in the rapidly evolving technology industry.
