Qualcomm Inc reported a quarter of contrasts, delivering revenue above expectations while falling short on per-share earnings, and then setting guidance for the coming quarter that disappointed investors.
For the third quarter ended June 28, the chipmaker recorded adjusted earnings per share of $2.21, missing the analyst consensus of $2.23 by $0.02. Revenue for the quarter was $9.95 billion, exceeding the estimate of $9.67 billion, but representing a 4% decline from $10.37 billion in the same period a year earlier.
Looking ahead, Qualcomm provided guidance for the fourth quarter that weighed on the stock. The company expects adjusted EPS in a range of $2.05 to $2.25, with a midpoint of $2.15. That midpoint sits notably below the analyst estimate of $2.35. On revenue, Qualcomm guided $9.7 billion to $10.5 billion, with a midpoint of $10.1 billion - a figure above the consensus forecast of $9.95 billion.
Shares fell roughly 5% after the company released its results and the weaker-than-expected earnings outlook for the fourth quarter.
"Despite a challenging memory and supply environment, our third quarter results reflect solid execution of our growth strategy, with quarterly revenues at the high end of guidance," said Cristiano Amon, President and CEO of Qualcomm Inc.
Segment-level results showed mixed trends. Qualcomm’s QCT segment, which covers chips for handsets, automotive applications and connected devices, produced $8.5 billion in revenue, down 5% year-over-year. Within that segment, handset revenue declined 20% from the prior year to $5.09 billion. Conversely, automotive revenue increased sharply, rising 61% year-over-year to $1.59 billion - a run that Qualcomm said represents 23 consecutive quarters of double-digit year-over-year growth. IoT revenue also expanded, increasing 9% to $1.83 billion. On a combined basis, automotive and IoT revenues rose 28% from the year-ago quarter.
The company’s licensing division, QTL, reported $1.28 billion in revenue, a decline of 3% compared with the prior-year period.
Management pointed to a broad-based rise in semiconductor industry input costs. The company said those cost increases span wafer fabrication, assembly, test, advanced packaging, memory and other materials. Qualcomm indicated it is taking steps to reflect higher input costs in product pricing.
This report highlights a company managing divergent trends: revenues holding near the high end of guidance even as margins and near-term profit expectations face pressure from rising input costs and softer handset demand. Investors reacted primarily to the trimmed earnings outlook rather than the stronger-than-expected top-line result.
- Revenue beat: Q3 sales of $9.95 billion topped estimates despite being down 4% year-over-year.
- Earnings shortfall: Adjusted EPS of $2.21 missed the $2.23 consensus by $0.02.
- Guidance gap: Q4 EPS midpoint of $2.15 is below the $2.35 analyst expectation.
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