01—Abstract
Summary
Summary of the 10-K filed November 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Qualcomm's fiscal 2025 (ended September 28, 2025) was a tale of two very different stories.
Revenue grew 14% to $44.3 billiona, driven by a 16% increase in QCT (semiconductor) revenue to $38.4 billion, led by higher handset ASPs and premium-tier Snapdragon mix, plus strong IoT and automotive growth. Operating income rose to $12.4 billion from $10.1 billion, and QTL licensing was roughly flat at $5.6 billion. However, GAAP net income fell 45% to $5.5 billion, almost entirely because of a $5.7 billion non-cash income tax charge to establish a valuation allowance against most federal deferred tax assets, following the OBBB tax legislation and Qualcomm's expectation of being perpetually subject to the corporate alternative minimum tax.
Excluding this charge, earnings would have been meaningfully higher, though the effective tax rate was 56%b. The filing also highlights structural risks investors should weigh. Management explicitly states that Apple will increasingly use its own modem, which it expects to have a significant negative impact on QCT revenues, and Chinese OEMs and U.S./China trade tensions add further concentration risk.
Customer concentration remains high, with three customers each above 10% of revenue, and the Huawei export license revocation removed a meaningful revenue source. Gross margin slipped to 55% from 56%, and R&D spending was roughly flat, with R&D falling to 20% of revenue. Management is pursuing diversification into automotive, IoT and data center, and is pending the acquisition of Alphawave IP for approximately $2.4 billionc, expected to close in calendar Q1 2026.
Capital returns remained substantial: $12.6 billiond was returned in fiscal 2025 through $8.8 billion of buybacks and $3.8 billion of dividends, with $7.2 billion remaining under the repurchase authorization. Operating cash flow rose to $14.0 billion. Cash and marketable securities of $12.5 billion (including $2.3 billion of restricted cash for Alphawave) compare with $14.8 billion of debt.
The company also faces ongoing litigation, notably the Arm dispute over Nuvia-derived CPU designs (a final judgment in Qualcomm's favor was entered September 30, 2025, but Arm has appealed), and ParkerVision. Management expects a favorable cash tax impact in fiscal 2026 because domestic R&D expensing is permanently reinstated.
02—Key points
Key Highlights
- Revenue up 14% to $44.3B; QCT revenue up 16% to $38.4B on premium Snapdragon handset mix, IoT growth and automotive launches
- GAAP net income fell 45% to $5.5B due to a $5.7B non-cash valuation allowance charge on federal deferred tax assets; effective tax rate was 56%
- Gross margin declined to 55% from 56%, reflecting lower QTL licensing mix; R&D was flat at $9.0B (20% of revenue)
- Management expects Apple to increasingly use its own modem, a significant negative for future QCT revenue
- Operating cash flow rose to $14.0B; $12.6B returned to shareholders via $8.8B buybacks and $3.8B dividends, with $7.2B buyback authorization remaining
- Pending $2.4B Alphawave IP acquisition (expected close Q1 calendar 2026) funded partly by $2.3B of restricted cash to expand into data centers
- Revenue concentration remains high, with three customers each above 10% of revenue; China represents 46% of revenue and Huawei export licenses were revoked
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, Qualcomm Inc kept $0.13.
- Revenue$44.28B100.0%
- Cost of revenue−$19.74B44.6%
- Gross profit$24.55B55.4%
- Operating costs−$12.19B27.5%
- Operating income$12.36B27.9%
- Interest, other & tax−$6.81B15.4%
- Net income$5.54B12.5%
Where FY2025 revenue went
$44.28B- Cost of revenue: $19.74B, 45% of revenue
- R&D: $9.04B, 20% of revenue
- Interest, other & tax: $6.81B, 15% of revenue
- Net income: $5.54B, 13% of revenue
- SG&A: $3.11B, 7.0% of revenue
Kept 13% as net incomeNet income $5.54B · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed November 5, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $44.28B$38.96B | +13.7% |
| Cost of Revenue | $19.74B$17.06B | +15.7% |
| Gross Profit | $24.55B$21.90B | +12.1% |
| R&D Expenses | $9.04B$8.89B | +1.7% |
| SG&A Expenses | $3.11B$2.76B | +12.7% |
| Operating Expenses | $31.93B$28.89B | +10.5% |
| Operating Income | $12.36B$10.07B | +22.7% |
| Interest Expense | $664.00M$697.00M | −4.7% |
| Net Income | $5.54B$10.14B | −45.4% |
| EPS (Basic) | $5.05$9.09 | −44.4% |
| EPS (Diluted) | $5.01$8.97 | −44.1% |
| Shares Outstanding (Basic) | 1.10B1.12B | −1.8% |
| Shares Outstanding (Diluted) | 1.10B1.13B | −2.2% |
05—Questions
Frequently Asked Questions
Why did net income fall 45% if revenue and operating income grew?
The decline was driven by a $5.7 billion non-cash income tax charge recorded in Q4 fiscal 2025. Following the OBBB tax legislation, Qualcomm expects to be subject to the corporate alternative minimum tax from fiscal 2026 and no longer expects to realize most of its federal deferred tax assets, so it established a valuation allowance. Operating income actually rose to $12.4B from $10.1B.
How much of Qualcomm's business depends on Apple and Chinese customers?
Apple, Samsung and Xiaomi each accounted for 10% or more of consolidated revenue in fiscal 2025, and China (including Hong Kong) represented 46% of revenue. Management has stated that Apple will increasingly use its own modem, which it expects to significantly reduce QCT revenue over time, and Chinese OEMs are developing their own chips in part due to government policy.
Is the dividend and buyback program sustainable given the tax charge and debt?
Operating cash flow of $14.0B covered $12.6B of capital returns in fiscal 2025, though cash and marketable securities declined to $12.5B and total debt is $14.8B. Management states it intends to continue quarterly dividends, subject to capital availability, and the tax reforms are expected to lower cash taxes beginning in fiscal 2026 because domestic R&D is again deductible as incurred.
What are the main legal risks investors should watch?
The most significant matters are the Arm litigation over Nuvia-derived CPU designs (Qualcomm won a jury verdict and final judgment in September 2025, but Arm appealed to the Third Circuit), Qualcomm's own suit against Arm with trial set for March 2026, and the ParkerVision patent damages case. Qualcomm has not accrued any loss, considering losses reasonably possible but not probable. The filing also discusses ongoing antitrust scrutiny of its licensing practices worldwide.
06—Continue