What was the main driver behind the significant year-over-year decrease in revenue?

The primary driver for the substantial year-over-year decrease in revenue was the comparison to a very strong Q3 FY2019. In Q3 FY2019, Qualcomm recognized a significant licensing revenue of $4.7 billion related to a settlement with Apple and its contract manufacturers. This large, one-time revenue item was not present in Q3 FY2020, leading to the large percentage decline in total revenues.

How did the COVID-19 pandemic impact QUALCOMM's business during the quarter?

The COVID-19 pandemic negatively impacted consumer demand for devices that incorporate QUALCOMM's products and intellectual property. This led to decreased demand for their integrated circuit products and a reduction in royalties earned from licensing. While the pandemic minimally impacted QUALCOMM's ability to fulfill customer orders, it did affect sales volumes in both the QCT and QTL segments.

What is the significance of the settlement with Huawei?

The settlement agreement with Huawei, along with a new long-term patent license agreement, is significant as it resolves prior disputes and is expected to generate approximately $1.8 billion in revenue in the fourth quarter of fiscal 2020. This includes settlement payments and estimated royalty revenues for past and current periods, providing a substantial boost to anticipated future revenue.

What is the company's outlook for the next quarter and beyond, considering the ongoing pandemic?

QUALCOMM anticipates that the economic slowdown caused by the COVID-19 pandemic will continue to negatively impact QTL and QCT revenues in the near term due to reduced consumer demand. However, they expect a gradual recovery in device sales starting in the September quarter. The company remains focused on 5G deployments and new device categories, and believes its liquidity and cash flow generation will sustain operations for at least the next 12 months, despite ongoing uncertainties.

QCOM 10-Q Quarterly Report Q3 FY2020 — Revenue, Net Income, EPS

Summary

QUALCOMM Incorporated (QCOM) reported its third quarter fiscal 2020 results on July 28, 2020. The company's financial performance in the quarter ending June 28, 2020, showed a significant year-over-year decline in total revenues, primarily due to the absence of a large licensing revenue settlement with Apple that occurred in the prior year's quarter. Total revenues for the quarter were $4.9 billion, down from $9.6 billion in Q3 FY2019. Net income also decreased substantially to $845 million from $2.1 billion in the prior year quarter. The company highlighted that the COVID-19 pandemic negatively impacted consumer demand for devices utilizing their products, affecting both the QCT (chipset) and QTL (licensing) segments, though QCT revenues saw a modest year-over-year increase driven by 5G product demand. Despite the revenue decline, QCOM's QCT segment demonstrated resilience with a 7% increase in revenue, driven by demand for 5G products and adjacent industry segments. However, the QTL segment experienced a 19% decrease in revenue, mainly due to lower royalty revenues from Huawei. The company also announced a significant subsequent event: a settlement and new long-term patent license agreement with Huawei, which is expected to provide a revenue boost in the fourth quarter of fiscal 2020. Management noted that the pandemic continues to present uncertainties but that their liquidity remains strong, and they expect business to gradually recover in the upcoming quarters.

Financial Highlights

50 data points

Beta

Revenue

$4.89B

0.6% Gross Margin

Net Income

$845.00M

0.2% Net Margin

EPS (Diluted)

$0.74

Total Assets

$32.33B

Cash & Equivalents

$6.12B

Free Cash Flow

$1.87B

Financial Statements

Beta

Revenue	$4.89B
Cost of Revenue	$2.08B
Gross Profit	$2.81B
R&D Expenses	$1.52B
SG&A Expenses	$511.00M
Operating Expenses	$4.11B
Operating Income	$782.00M
Interest Expense	$143.00M
Net Income	$845.00M
EPS (Basic)	$0.75
EPS (Diluted)	$0.74
Shares Outstanding (Basic)	1.13B
Shares Outstanding (Diluted)	1.14B

Key Highlights

1Total revenues for Q3 FY2020 decreased 49% year-over-year to $4.9 billion, primarily due to a significant decline in licensing revenue compared to a large one-time settlement recognized in Q3 FY2019.
2Net income for Q3 FY2020 fell 61% year-over-year to $845 million ($0.74 per diluted share).
3QCT (chipset) segment revenues increased 7% year-over-year to $3.8 billion, driven by demand for 5G products and growth in adjacent markets.
4QTL (licensing) segment revenues decreased 19% year-over-year to $1.0 billion, impacted by lower royalty revenues from Huawei and the effects of COVID-19 on licensee sales.
5The company announced a settlement and new long-term patent license agreement with Huawei, expected to contribute approximately $1.8 billion in revenue in Q4 FY2020.
6Cash, cash equivalents, and marketable securities stood at $10.6 billion as of June 28, 2020, reflecting a decrease from the prior year, partly due to suspended share repurchases in light of COVID-19.
7The company continues to face significant ongoing legal and regulatory challenges, including an appeal in the FTC v. QUALCOMM Incorporated case and investigations by the European Commission and Korean Fair Trade Commission.

QUALCOMM INC/DE Quarterly Report for Q3 Ended Jun 28, 2020

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions