Mobile demand rebounds, Qualcomm's revenue in the last quarter exceeded expectations with an 11% growth, and may surge by 19% this quarter | Financial Report Insights

In the just-ended quarter, the leading smartphone chip giant Qualcomm saw its sales revenue exceed expectations with accelerated growth, and it is expected to have even stronger growth in the current quarter, bringing good news of a rebound in smartphone demand.

After the U.S. stock market closed on Wednesday, July 31, Qualcomm announced its financial results for the third quarter of the 2024 fiscal year (referred to as the second quarter) ending on June 23, 2024, and provided performance guidance for the fourth quarter (referred to as the third quarter) ending in late September.

1) Key Financial Data

Revenue: Adjusted revenue for the second quarter under non-GAAP was $9.391 billion, a year-on-year increase of 11%, exceeding analysts' expectations of $9.21 billion, and a 1% increase from the first quarter.

EPS: Adjusted earnings per share (EPS) for the second quarter was $2.33, a 25% increase year-on-year, surpassing analysts' expectations of $2.24, and a 13% increase from the first quarter.

EBT: Pre-tax profit for the second quarter was $3.034 billion, a 25% increase year-on-year, and an 11% increase from the first quarter.

2) Segment Revenue

QCT: Revenue for the second quarter from Qualcomm CDMA Technologies (QCT), which includes semiconductor business mainly for smartphones, automotive, and IoT products, was $8.069 billion, an 11% increase year-on-year, and a 1% increase from the first quarter.

QTL: Revenue for the second quarter from Qualcomm Technology Licensing (QTL), responsible for intellectual property licensing, was $1.273 billion, a 3% increase year-on-year, and a 2% increase from the first quarter.

3) Performance Guidance

Revenue: Revenue for the third quarter is expected to be between $9.5 billion and $10.3 billion, with analysts expecting $9.7 billion.

EPS: Adjusted EPS for the third quarter is expected to be between $2.45 and $2.65, with analysts expecting $2.45.

Following the financial report, Qualcomm stated that the PC business exceeded internal targets, and the smartphone market is expected to stabilize slightly this year.

After the financial report was released, Qualcomm's stock price surged by 8.4% on Wednesday, further rising after hours by nearly 7%, but later retreated, erasing all gains and turning negative, currently down by less than 1% after hours.

Smartphone Chip Revenue Grew by 12% in the Second Quarter, Far Exceeding the First Quarter; Third Quarter EPS Guidance Shows Highest Increase of 31%

In the second quarter, Qualcomm's revenue growth far exceeded that of the first quarter, mainly supported by the significant growth in its largest business segment, smartphone chips. Revenue from smartphone chips in the quarter increased by 12% year-on-year, compared to only 1% growth in the first quarter.

In the second quarter, revenue from the fastest-growing emerging business, automotive chips, was only $810 million, less than 14% of smartphone chip revenue, but with a growth rate of 87%, more than double the 35% growth rate in the first quarter. Including chips used in Meta's virtual reality headset Quest, revenue from the IoT business in the second quarter decreased by 8% year-on-year, showing a slight improvement from the 11% decline in the first quarter Comments believe that as a giant in manufacturing processors and wireless chips, Qualcomm's performance, a barometer of one of the largest markets for electronic products, further proves that the smartphone industry is emerging from a downturn.

Based on Qualcomm's guidance range, Qualcomm expects that third-quarter revenue will increase by about 9.6% to 18.9% year-on-year, with an average of $9.9 billion in revenue, representing a 14.7% year-on-year growth, accelerating further from the second quarter and surpassing analysts' expectations of nearly 11.9%.

Qualcomm expects third-quarter EPS to increase by 21.3% to 31.2% year-on-year, with analysts expecting growth at the lower end of the guidance, namely an increase of 21.3%.

In the second quarter, Qualcomm's IoT business revenue continued to decline, but this business is expected to be boosted by AI PCs. Some comments point out that Qualcomm's IoT business includes the new PC chip Snapdragon X Elite designed for Windows laptops. This chip was unveiled with the launch of Microsoft's AI PC new products, Surface Pro and Surface Laptop, in June this year.

The first batch of reviews in June showed that Qualcomm's 12-core Snapdragon X Elite chip outperformed Apple's 8-core M3 chip in multi-core performance, but the M3 still remains unbeaten in single-core performance. In many tasks, Apple's M3 still has a faster processing speed and is more power-efficient than the X Elite.

Qualcomm is also striving to surpass Apple in the mobile chip field. News in May this year mentioned that Qualcomm will adopt NUVIA's Phoenix architecture to launch a redesigned Snapdragon 8 Gen4 processor with a target frequency of an astonishing 4.26GHz, not only increasing by nearly 30% compared to the previous generation Snapdragon 8 Gen3 but also surpassing Apple's latest A17 Pro by 13%. This means that Qualcomm's chips, which have always been criticized for single-core performance, are making a qualitative leap