Summary
Qualcomm's third quarter fiscal year 2019 results showed a significant increase in total revenues, driven primarily by a substantial one-time licensing revenue recognition from the settlement with Apple and its contract manufacturers. This settlement, effective April 1, 2019, included a global patent license agreement and a chipset supply agreement, leading to a $4.7 billion licensing revenue in the quarter. Despite this boost, the Equipment and Services segment (QCT) experienced a decline in revenue due to lower modem sales to Apple and reduced demand from Chinese OEMs. Net income also saw a significant increase year-over-year, largely influenced by the Apple settlement and a considerable $2.5 billion charge to income tax expense related to the write-off of a deferred tax asset. The company continues to navigate ongoing legal and regulatory challenges, including the FTC ruling, which is being appealed. Management remains focused on 5G technology development and expansion into adjacent markets like automotive and IoT, while also managing operational costs.
Financial Highlights
51 data points| Revenue | $9.63B |
| Cost of Revenue | $2.11B |
| Gross Profit | $7.52B |
| R&D Expenses | $1.38B |
| SG&A Expenses | $547.00M |
| Operating Expenses | $4.32B |
| Operating Income | $5.32B |
| Interest Expense | $160.00M |
| Net Income | $2.15B |
| EPS (Basic) | $1.77 |
| EPS (Diluted) | $1.75 |
| Shares Outstanding (Basic) | 1.22B |
| Shares Outstanding (Diluted) | 1.23B |
Key Highlights
- 1Total revenues surged to $9.6 billion, a 73% increase year-over-year, heavily influenced by a $4.7 billion licensing revenue from the Apple settlement.
- 2Net income reached $2.1 billion, up 79% year-over-year, but was impacted by a significant $2.5 billion income tax charge related to a deferred tax asset write-off.
- 3The Equipment and Services (QCT) segment saw revenues decrease by $554 million year-over-year due to lower modem sales to Apple and a decline in demand from Chinese OEMs.
- 4The Qualcomm Technology Licensing (QTL) segment's licensing revenues decreased by $151 million year-over-year, partly due to lower royalty revenues from Huawei under interim agreements.
- 5The company adopted new revenue recognition guidance (ASC 606) in fiscal 2019, accelerating royalty revenue recognition by one quarter.
- 6Qualcomm continues to invest heavily in 5G technologies and expansion into adjacent markets such as automotive and IoT.
- 7The company has $7.8 billion remaining under its $30 billion stock repurchase program authorization as of June 30, 2019.