Qualcomm(QCOM) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported non-GAAP revenues of $10.8 billion and non-GAAP earnings per share of $2.85, both exceeding the midpoint of guidance [4][20] - QCT delivered revenues of $9.5 billion with an EBT margin of 30%, while QTL revenues were $1.3 billion with a flat EBITDA margin of 70% year-over-year [20][21] - The company returned $2.7 billion to shareholders, including $938 million in dividends and $1.7 billion in stock repurchases [21] Business Line Data and Key Metrics Changes - QCT handset revenues grew 12% year-over-year to $6.9 billion, driven by increased premium tier Android shipments [21] - QCT IoT revenues increased 27% year-over-year to $1.6 billion, with industrial IoT being the largest growth contributor [21][40] - Automotive revenues reached $959 million, reflecting a 59% year-over-year growth due to increased content in new vehicle launches [21][15] Market Data and Key Metrics Changes - The company expects QCT revenues to grow approximately 12% year-over-year, led by strength in handsets, IoT, and automotive [23] - In the PC market, Snapdragon-based PCs accounted for approximately 9% of Windows laptops above the $600 price tier in retail [12][68] - The company anticipates achieving $4 billion in revenues from the PC segment by fiscal 2029 [12] Company Strategy and Development Direction - The company aims to grow non-handset revenues to $22 billion by fiscal 2029, focusing on AI and connectivity [5][24] - Strategic acquisitions, such as Edge Impulse and Focus AI, are intended to enhance capabilities in industrial IoT and AI [18][43] - The company remains committed to its long-term financial framework despite macroeconomic uncertainties [24][25] Management's Comments on Operating Environment and Future Outlook - Management noted that there is no material direct impact from tariffs at this point, but they are closely monitoring the situation [30][56] - The company expressed confidence in its technology roadmap and relevance across various industries [91] - Management highlighted the ongoing transition from microcontrollers to microprocessors and AI in the IoT space as a significant growth opportunity [40] Other Important Information - The company launched the Dragonwing fixed wireless access Gen four Elite platform, which is the world's first 5G advanced FWA platform [19] - The x85 modem platform was positively received by major operators in the U.S., China, and Japan, enhancing connectivity for 5G smartphones [10][11] Q&A Session Summary Question: Can you discuss the assumptions in your guidance for the handset market? - Management indicated that their guidance reflects the current assessment of the financial impact from tariffs, with no material direct impact observed [30][32] Question: Any updates on Huawei royalty revenue negotiations? - There are no updates on negotiations, which are ongoing [34] Question: What drove the upside in the IoT segment? - The IoT segment saw 27% year-over-year growth, primarily driven by industrial applications and the transition to AI [38][40] Question: How do recent acquisitions enhance capabilities in current markets? - Acquisitions are aimed at augmenting the IoT space, particularly in industrial applications, to leverage advanced computing and AI [42][43] Question: What is the outlook for the automotive segment? - The automotive segment is expected to double by fiscal 2029, driven by increased digital cockpit and ADAS content [58][60] Question: How is the competitive landscape in smartphones? - The competitive landscape remains stable, with Qualcomm maintaining a strong position against competitors like MediaTek [74] Question: What are the expectations for chipset gross margins? - Chipset gross margins were affected by a mix across tiers, but management remains optimistic about future trends [52][53] Question: What is the rationale behind increasing the capital return target? - The increase reflects strong cash flow generation and a strategic opportunity to leverage cash balances for shareholder returns [89]