Qualcomm Beats Expectations With 12% Increase in Phone Chip Sales

Las Vegas — Qualcomm’s fiscal third-quarter earnings beat Wall Street forecasts, delivering solid results and an upbeat outlook for the next quarter.

In a press conference during CES 2022, Qualcomm Chairman and CEO Cristiano Amon discussed the company’s performance. Following the earnings report, Qualcomm shares jumped more than 6% in after-hours trading.

For the quarter ended June 23, Qualcomm’s results were as follows versus LSEG consensus estimates:

• Earning per share: $2.33 (adjusted) vs. $2.25 expected
• Income: $9.39 billion (adjusted) vs. $9.22 billion expected

Net income for the quarter reached $2.13 billion, or $1.88 a share, up from $1.8 billion, or $1.60 a share, in the same period last year.

Looking ahead, Qualcomm forecasts sales of $9.5 billion to $10.3 billion for the current quarter, beating Wall Street expectations of $9.71 billion. The company forecast earnings of $2.38 to $2.58 per share, compared to analysts’ expectations of $2.45.

Qualcomm’s main revenue driver, its mobile phone business, saw a 12% year-over-year increase in mobile phone sales to $5.9 billion. That’s in line with StreetAccount analyst estimates and suggests a recovery from the steep decline in smartphone sales over the past two years.

The company is highlighting its advanced Snapdragon chips, which are essential for “AI smartphones” like Samsung’s recent models, which can perform generative AI tasks like creating images.

“AI has expanded the size of the premium tier,” CEO Cristiano Amon said on a financial results call. “Even in a market with flat or low single-digit growth, the premium tier is growing faster.”

While still a smaller segment, Qualcomm sees significant growth potential in automotive chips. Automotive revenue increased 87% year over year to $811 million, beating StreetAccount expectations of $641.7 million.

Qualcomm’s Internet of Things (IoT) division, which includes chips for affordable devices and Meta’s Quest headset, saw revenue decline 8% year over year to $1.4 billion, but still beat StreetAccount’s forecast of $641.7 million. The division also features the new Snapdragon X Elite PC chip for Windows laptops, which it recently launched with Microsoft.

Amon described the Snapdragon X launch as a “milestone” in Qualcomm’s diversification strategy. Overall, the company’s chip division (QCT) achieved sales of $8.1 billion, up 12 percent from the previous year.

In addition to chip sales, Qualcomm collects licensing fees from companies that use its 5G and other cellular technologies, reported as QTL sales. Licensing revenue grew 3% year over year to $1.3 billion.

During the quarter, Qualcomm paid out $949 million in dividends and repurchased 7 million shares valued at $1.3 billion.