Qualcomm(US:QCOM)2023-02-01 16:00Financial Performance - Total revenues for the quarter ended December 25, 2022 were $9.463 billion, a decrease from $10.705 billion in the same period last year[20] - Net income for the quarter was $2.235 billion, down from $3.399 billion in the prior year period[20] - Comprehensive income for the quarter was $2.550 billion, down from $3.329 billion in the prior year period[22] - Net income from continuing operations for the three months ended December 25, 2022 was $2.273 billion, compared to $3.399 billion in the same period last year[24] - Total QCT revenues for the three months ended December 25, 2022 were $7.892 billion, down from $8.847 billion in the same period last year, with Handsets revenue at $5.754 billion, Automotive at $456 million, and IoT at $1.682 billion[33] - QCT segment revenue for Q3 2022 was $7.892 billion, a decrease from $8.847 billion in Q3 2021[54] - QTL segment revenue for Q3 2022 was $1.524 billion, down from $1.818 billion in Q3 2021[54] - Total revenue for Q3 2022 was $9.463 billion, compared to $10.705 billion in Q3 2021[54] - QCT segment EBT for Q3 2022 was $2.183 billion, a decrease from $3.114 billion in Q3 2021[54] - QTL segment EBT for Q3 2022 was $1.117 billion, down from $1.406 billion in Q3 2021[54] - Total EBT for Q3 2022 was $2.371 billion, compared to $3.865 billion in Q3 2021[54] Cash Flow and Liquidity - Cash and cash equivalents increased to $4.808 billion as of December 25, 2022, up from $2.773 billion at September 25, 2022[19] - Net cash provided by operating activities for the three months ended December 25, 2022 was $3.095 billion, up from $2.057 billion in the same period last year[24] - The company's marketable securities totaled $3.43 billion as of December 25, 2022, including $3.185 billion in corporate bonds and notes[66] - Available-for-sale debt securities had contractual maturities of $1.26 billion within one year and $1.941 billion between one to five years[67] Expenses and Investments - Research and development expenses increased to $2.251 billion, up from $1.930 billion in the prior year quarter[20] - Unallocated R&D expenses for Q3 2022 were $522 million, up from $453 million in Q3 2021[57] - Unallocated SG&A expenses for Q3 2022 were $167 million, compared to $152 million in Q3 2021[57] - Unallocated interest expense for Q3 2022 was $170 million, up from $139 million in Q3 2021[57] - Unallocated investment and other income for Q3 2022 was $87 million, compared to $23 million in Q3 2021[57] - Investment and Other Income, Net for the three months ended December 25, 2022 was $76 million, compared to $140 million in the same period last year[36] Debt and Financing - Long-term debt increased to $15.431 billion as of December 25, 2022, up from $13.537 billion at September 25, 2022[19] - The company issued $1.9 billion in new fixed-rate notes in November 2022, with rates ranging from 5.40% to 6.00% and maturities extending to 2053[42] - Total long-term debt increased from $14.983 billion at September 25, 2022 to $16.877 billion at December 25, 2022[43] - The company terminated $1.6 billion in interest rate swaps during Q1 fiscal 2023, resulting in $334 million in gains being reclassified to reduce interest expense[45] - The company terminated forward-starting interest rate swaps with a notional amount of $1.6 billion, recording gains of $334 million to reduce interest expense[142] Shareholder Equity and Dividends - Total stockholders' equity as of December 25, 2022 was $18.810 billion, up from $11.333 billion in the same period last year[26] - Dividends per share announced for the three months ended December 25, 2022 were $0.75, compared to $0.68 in the same period last year[26] - The company announced a cash dividend of $0.75 per share payable on March 23, 2023[40] - $6.8 billion remained authorized for stock repurchase under the company's $10.0 billion program as of December 25, 2022, with $531 million used to repurchase 5 million shares since then[38] - Shares outstanding decreased from 1,121 million at September 25, 2022 to 1,119 million at December 25, 2022[40] - Dilutive common share equivalents included in diluted shares decreased from 18 million in Q1 fiscal 2022 to 9 million in Q1 fiscal 2023[41] Inventory and Assets - Total current assets increased to $21.098 billion as of December 25, 2022, compared to $20.724 billion at September 25, 2022[19] - Inventories as of December 25, 2022 were $6.932 billion, up from $6.341 billion at September 25, 2022, with raw materials at $228 million, work-in-process at $3.647 billion, and finished goods at $3.057 billion[30] Licensing and Revenue Concentration - The company's licensing revenues decreased to $1.679 billion from $2.023 billion year-over-year[20] - Revenues from customer/licensee (y) accounted for 34% of total revenues for the three months ended December 25, 2022, up from 26% in the same period last year[34] Restructuring and Severance - Restructuring charges for the three months ended December 25, 2022 were $80 million, primarily related to accrued severance costs, with an additional $80 million expected in the second quarter of fiscal 2023[35] Tax and Unrecognized Benefits - The company estimates its annual effective income tax rate for fiscal 2023 to be 9%, lower than the U.S. federal statutory rate due to preferential treatment of foreign-derived intangible income and R&D tax credits[37] - Unrecognized tax benefits remained at $2.2 billion as of December 25, 2022, primarily related to a Korean withholding tax refund claim[37] Acquisitions and Investments - The total cash consideration for the acquisition of Veoneer was $4.7 billion, including $4.6 billion for capital stock and equity awards, and a $110 million termination fee paid to Magna[58] - The company provided approximately $300 million in funding to the Non-Arriver businesses, with $150 million remaining available as of December 25, 2022[58] - Magna agreed to acquire the Active Safety business from SSW Partners for approximately $1.5 billion in cash, expected to be completed within fiscal 2023[59] - The accounting purchase price for Veoneer was approximately $4.3 billion, excluding Veoneer's convertible senior notes[61] - Goodwill related to the Veoneer acquisition was allocated $2.789 billion, with $471 million expected to be deductible for tax purposes[62] - Completed technology-based intangible assets were valued at $349 million, to be amortized over nine years, while IPR&D was valued at $298 million, expected to be completed by fiscal 2025[62] Business Risks - The company's semiconductor business faces risks from customers developing their own integrated circuit products[7] - A significant portion of the company's business is concentrated in China, exposing it to U.S./China trade tensions[7] Remaining Performance Obligations - Remaining performance obligations as of December 25, 2022 were $577 million, with $301 million expected to be recognized in the remainder of fiscal 2023[33]