Qualcomm Q2 2024 Earnings Report

Qualcomm reported profit for the second quarter on Wednesday, which beat Wall Street expectations and provided strong guidance for the current quarter.

Shares rose about 4% in extended trading.

Here’s how it fared against LSEG consensus estimates for the quarter ended March 24:

• Earnings per share: $2.44 adjusted vs. $2.32 expected
• income: $9.39 billion adjusted vs. $9.34 billion expected

Net income in the quarter was $2.33 billion, or $2.06 per share, compared with $1.7 billion, or $1.52 per share, in the year-ago period.

Qualcomm said it expects between $8.8 billion and $9.6 billion in sales in the current quarter, higher than Wall Street expectations of $9.05 billion. Analysts were expecting earnings guidance of $2.17 per share, compared to the company’s estimate of between $2.15 and $2.35.

Qualcomm’s most important business is the phone business. It sells processors, modems and other parts for smartphones – mostly Android devices, but also some modem parts in iPhones.

Phone sales rose 1 percent year-on-year to $6.18 billion, signaling that the smartphone market may be recovering after several years of post-Covid decline. Qualcomm called for strong demand for “premium-level” smartphones, which require the most advanced chips, especially in China. Qualcomm said revenue from Chinese phone makers rose 40% year over year in the quarter.

Qualcomm calls phones using its top chips “AI-powered smartphones,” citing features like generative email completion, live translation and virtual assistants that use the chip’s dedicated “NPU” AI section. One such phone is Samsung’s Galaxy S24 Ultra, which launched earlier this year.

“As artificial intelligence rapidly expands from the cloud to devices, we are extremely well positioned to take advantage of this growth opportunity,” Qualcomm CEO Cristiano Amon said on an earnings call with analysts.

The company’s automotive business, which sells chips to automakers, also showed signs of growth, rising 35% year over year to $603 million. The company’s so-called “Internet of Things” business — consisting of cheaper and virtual reality chips — shrank 11 percent year over year to $1.24 billion.

Those three business lines are reported together as QCT, the company’s chip business, which posted a 1% year-over-year increase in sales to $8.03 billion. Qualcomm also highlighted

The company’s licensing business, QTL, in which it collects fees from companies that want to integrate 5G or cellular technology into their products, grew 2% year over year to $1.32 billion.

Qualcomm said it paid $895 million in dividends and repurchased $731 million in shares during the quarter. Qualcomm raised its quarterly dividend to 85 cents from 80 cents previously.