Qualcomm (QCOM) earnings Q3 2022

Qualcomm reported third-quarter earnings soon after the bell on Wednesday, slightly beating Wall Street estimates, but advice for the existing quarter was brief of consensus anticipations.

Qualcomm inventory dropped above 4{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} in extended investing.

Here is how Qualcomm did vs . Refinitiv consensus anticipations:

• EPS: $2.96, modified, versus $2.87 anticipated, up 53{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} yr-in excess of-yr.
• Profits: $10.93 billion, adjusted, compared to $10.88 billion predicted, up 37{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} 12 months-around-yr.

Qualcomm explained it anticipated involving $3 and $3.30 in earnings for each share in the course of the fourth quarter on amongst $11 billion and $11.8 billion in revenue, slipping small of Wall Street’s Q4 earnings expectations of $3.23 per share and $11.87 billion in product sales.

Qualcomm CEO Cristiano Amon explained in a assertion that the firm’s results were being potent irrespective of being in a “difficult macroeconomic setting.” Qualcomm profits rose 37{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} for the duration of the quarter.

Qualcomm’s biggest line of enterprise is marketing processors and modems for smartphones. The company’s handset business enterprise grew 59{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} on an once-a-year foundation all through the quarter to $6.15 billion, even with signals that smartphone sales may possibly be previously slowing down because of to macroeconomic circumstances this sort of as inflation.

But Qualcomm’s forecast instructed that the company’s handset income development would gradual through its fiscal fourth quarter, reflecting that a decrease in smartphone need could hit its principal organization both of those in phrases of earnings and earnings. The corporation expects operating charges to increase between 6{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} and 8{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} sequentially throughout the quarter.

Qualcomm CFO Akash Palkhiwala stated that the firm’s predicted fourth-quarter weakness in smartphone chip profits would be in the middle and lower tiers, as opposed to chips for the most costly telephones.

Qualcomm said it really is continue to on rate for its handset enterprise to improve a little down below 50{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} this 12 months thanks to a lot more high-priced chips.

Handsets are documented beneath a device termed QCT along with the other semiconductors Qualcomm sells, like RF front conclude, chips for autos and minimal-electricity chips for linked products. That section grew 45{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} on an once-a-year basis to $9.38 billion. Handsets had been the quickest rising enterprise in the section even with Qualcomm’s new efforts to diversify into other sorts of chips.

Qualcomm announced a partnership with Samsung by 2030 that features patent licensing and supplying Snapdragon processors for handsets. Samsung is the major smartphone producer in the world on a device basis.

Automotive chips grew 38{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} on an yearly basis to $350 million, an all-time-large for Qualcomm, suggesting it is really nonetheless a small enterprise in contrast to Qualcomm’s other lines. Qualcomm’s IoT business enterprise, which would make very low-power chips for connected gadgets, grew 31{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} to $1.83 billion.

QTL, the other major Qualcomm unit that is comprised of licensing charges associated to 5G and other technologies the firm can make, described virtually $1.52 billion in product sales, a 2{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} yearly rise. It has not been developing strongly in current years but remains a major resource of profit for the chipmaker.

The firm’s gross margin arrived up shorter of anticipations as chip prices rise due to shortages and challenges with Chinese generation. Qualcomm outsources its chip manufacturing to foundries that have been booked good given that the start of the pandemic. Qualcomm documented a 56{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9} gross margin vs . a consensus estimate of 57.8{a78e43caf781a4748142ac77894e52b42fd2247cba0219deedaee5032d61bfc9}.

Qualcomm mentioned it used $1.3 billion on shareholder return in the course of the quarter, which includes $842 million of dividends.