01—Abstract
Summary
Summary of the 10-K filed November 3, 2021. Cited figures are marked; the original filing is the authoritative source.
QUALCOMM's fiscal 2021 10-K (fiscal year ended September 26, 2021) reflects a sharp rebound from the COVID-19 downturn.
Revenues rose 43% to $33.6 billiona from $23.5 billion, and net income rose 74% to $9.0 billion, or $7.87 diluted EPS. The growth was driven mainly by QCT (semiconductor) revenue, which increased 64% to $27.0 billion on stronger 5G handset demand, higher RFFE sales, and growth in automotive and IoT. QCT segment EBT margin improved to 29% from 17%.
QTL licensing revenue grew 26% in segment terms to $6.3 billion, though total licensing revenue fell to $6.8 billionb because fiscal 2020 included $1.8 billion of one-time Huawei settlement and license revenue. Gross margin declined to 58% from 61%, largely for that Huawei-related reason and a mix shift away from higher-margin licensing. The balance sheet strengthened, with cash and marketable securities of $12.4 billion and operating cash flow of $10.5 billion.
Total debt is about $15.5 billionc in principal. Management returned $6.4 billion to shareholders through $3.4 billion of buybacks and $3.0 billion of dividends.
Capital intensity is rising: capex was $1.9 billiond, and the company has $23.5 billion of purchase obligations, mainly multi-year foundry capacity commitments, $12.9 billion of which is due within 12 months. Investors should weigh the strong earnings momentum against a heavy concentration in a few customers (Apple, Samsung, Xiaomi each at 10% or more of revenue, and heavy exposure to China), ongoing vertical integration by large customers, active antitrust and royalty litigation, and the pending $4.5 billion Veoneer/Arriver acquisition announced in October 2021.
02—Key points
Key Highlights
- Revenue grew 43% to $33.6B and net income grew 74% to $9.0B, with diluted EPS of $7.87, versus $4.52 in fiscal 2020.
- QCT semiconductor revenue rose 64% to $27.0B on 5G demand from handsets and RFFE, with segment EBT margin up to 29% from 17%.
- Total licensing revenue declined to $6.8B because fiscal 2020 included $1.8B of one-time Huawei settlement and license revenue; QTL segment licensing revenue still grew 26% to $6.3B.
- Gross margin fell to 58% from 61%, mainly from the lapping of Huawei licensing revenue and a mix shift toward lower-margin chip sales.
- Operating cash flow of $10.5B funded $6.4B of shareholder returns ($3.4B buybacks, $3.0B dividends), plus $1.9B of capex and $1.4B of acquisitions, including NUVIA.
- Purchase obligations reached $23.5B, mostly multi-year foundry capacity commitments, with $12.9B due in the next 12 months, signaling a commitment to supply security.
- Pending $4.5B acquisition of Veoneer's Arriver business (ADAS) is expected to close in 2022, extending Qualcomm's push into automotive.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Qualcomm Inc kept $0.27.
- Revenue$33.57B100.0%
- Cost of revenue−$14.26B42.5%
- Gross profit$19.30B57.5%
- Operating costs−$9.52B28.3%
- Operating income$9.79B29.2%
- Interest, other & tax−$746.0M2.2%
- Net income$9.04B26.9%
Where FY2021 revenue went
$33.57B- Cost of revenue: $14.26B, 42% of revenue
- Net income: $9.04B, 27% of revenue
- R&D: $7.18B, 21% of revenue
- SG&A: $2.34B, 7.0% of revenue
- Interest, other & tax: $746.0M, 2.2% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 3, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $33.57B$23.53B | +42.6% |
| Cost of Revenue | $14.26B$9.26B | +54.1% |
| Gross Profit | $19.30B$14.28B | +35.2% |
| R&D Expenses | $7.18B$5.97B | +20.1% |
| SG&A Expenses | $2.34B$2.07B | +12.8% |
| Operating Expenses | $23.78B$17.28B | +37.6% |
| Operating Income | $9.79B$6.25B | +56.5% |
| Interest Expense | $559.00M$602.00M | −7.1% |
| Net Income | $9.04B$5.20B | +74.0% |
| EPS (Basic) | $7.99$4.58 | +74.5% |
| EPS (Diluted) | $7.87$4.52 | +74.1% |
| Shares Outstanding (Basic) | 1.13B1.14B | −0.4% |
| Shares Outstanding (Diluted) | 1.15B1.15B | 0.0% |
05—Questions
Frequently Asked Questions
What drove Qualcomm's strong fiscal 2021 results?
The main driver was a recovery from COVID-19 and a surge in 5G demand. QCT revenue rose $10.5B, led by higher handset chipset shipments and revenue per chip (including sales to Apple and other major OEMs), higher RFFE content, and growth in automotive and IoT. QTL also recovered, adding $1.1B in estimated multimode royalties.
Why did total licensing revenue fall even though QTL segment revenue grew?
Fiscal 2020 included $1.8B of Huawei revenue from a settlement and royalties for the March and June 2020 quarters, recorded outside segment results. Fiscal 2021 had no comparable item, so reported licensing revenue dropped $408M to $6.8B despite 26% growth in QTL segment licensing revenue to $6.3B.
What are the main risks to Qualcomm's business going forward?
Key risks include customer concentration (Apple, Samsung and Xiaomi each exceeded 10% of revenue), vertical integration by large customers such as Apple, which is developing its own modems, and heavy exposure to China amid U.S.-China trade tensions. The company also faces ongoing antitrust matters, including EC and KFTC investigations and consumer class actions, and pressure on its royalty model from OEMs and regulators.
How strong is Qualcomm's financial position and capital return capacity?
Cash, cash equivalents and marketable securities totaled $12.4B, and long-term debt was $13.7B with total principal of about $15.5B. Operating cash flow of $10.5B covered $6.4B of shareholder returns and $1.9B of capex. The board added a new $10B buyback authorization in October 2021, and the quarterly dividend was raised to $0.68 per share.
What is the outlook and what should investors watch for in fiscal 2022?
Management expects QCT revenue to keep rising across handsets, RFFE, automotive and IoT. R&D spending and capex are both expected to increase, along with multi-year supplier capacity commitments and related operating cash outflows. Investors should watch whether 5G device growth continues, the outcome of the Veoneer/Arriver deal, and any regulatory or litigation developments that could affect licensing revenue.
06—Continue