10-KPeriod: FY2023

QUALCOMM INC/DE Annual Report, Year Ended Sep 24, 2023

Filed November 1, 2023For Securities:QCOM

Summary

Qualcomm Incorporated (QCOM) reported fiscal year 2023 revenues of $35.8 billion, a decrease of 19% from fiscal year 2022, primarily driven by a slowdown in consumer demand for smartphones and other devices due to a challenging macroeconomic environment, coupled with elevated inventory levels at its customers. Net income saw a significant decrease of 44% to $7.2 billion. Despite the revenue decline, the company continues to invest heavily in research and development, with R&D expenses increasing by 7.6% to $8.8 billion, reflecting its commitment to innovation in areas like 5G, AI, automotive, and IoT. The company's core businesses, QCT (semiconductors) and QTL (licensing), both experienced revenue declines. QCT revenue fell 19% due to lower handset and IoT sales, while QTL revenue decreased by 17%, impacted by lower estimated sales of 3G/4G/5G products and the conclusion of certain upfront license fee considerations. Qualcomm is strategically positioning itself for future growth by expanding into non-handset markets such as automotive and IoT, aiming to leverage its foundational wireless technologies.

Financial Highlights

51 data points
Beta

Revenue

$35.82B

55.7% Gross Margin

Net Income

$7.23B

20.2% Net Margin

EPS (Diluted)

$6.42

Total Assets

$51.04B

Cash & Equivalents

$8.53B

Free Cash Flow

$11.30B

Financial Statements
Beta
Revenue$35.82B
Cost of Revenue$15.87B
Gross Profit$19.95B
R&D Expenses$8.82B
SG&A Expenses$2.48B
Operating Expenses$28.03B
Operating Income$7.79B
Interest Expense$694.00M
Net Income$7.23B
EPS (Basic)$6.47
EPS (Diluted)$6.42
Shares Outstanding (Basic)1.12B
Shares Outstanding (Diluted)1.13B

Key Highlights

  • 1Fiscal year 2023 revenue decreased by 19% to $35.8 billion, impacted by macroeconomic weakness and customer inventory drawdowns.
  • 2Net income decreased by 44% to $7.2 billion in fiscal year 2023.
  • 3Research and Development (R&D) expenses increased by 7.6% to $8.8 billion, underscoring a commitment to innovation in 5G, AI, automotive, and IoT.
  • 4QCT segment revenue declined by 19%, largely due to lower handset and IoT sales.
  • 5QTL segment revenue decreased by 17%, attributed to lower estimated product sales and the cessation of certain upfront license fees.
  • 6The company is actively pursuing diversification into automotive and IoT markets to mitigate reliance on the smartphone sector.
  • 7Qualcomm maintained a strong cash position, with cash, cash equivalents, and marketable securities totaling $11.3 billion at fiscal year-end 2023.

Frequently Asked Questions

The primary drivers of the revenue decline were a weakened macroeconomic environment negatively impacting consumer demand for smartphones and other devices, and customers drawing down on elevated inventory levels. This led to lower chipset shipments and reduced demand across both the handset and IoT segments.

Qualcomm is focusing on diversification into high-growth areas beyond mobile handsets, specifically automotive and the Internet of Things (IoT). The company continues to invest heavily in R&D to develop and enhance its foundational technologies in areas like 5G, AI, and advanced computing, aiming to leverage these innovations across these new industries.

QTL revenue decreased in fiscal year 2023 due to lower estimated sales of 3G/4G/5G multimode products, influenced by the macroeconomic environment, and the conclusion of certain upfront license fee considerations from a long-term agreement. The company expects ongoing revenue from licensing but faces challenges from potential disputes, governmental investigations, and efforts by some OEMs to reduce royalty obligations.

Qualcomm is prioritizing continued leadership in 5G technology development and licensing, alongside significant investments in extending its technologies and products into new and expanded areas such as automotive and IoT. The company is also focusing on advancements in AI, particularly on-device generative AI, and aims to capitalize on these trends to drive future growth and diversification.