10-QPeriod: Q2 FY2023

QUALCOMM INC/DE Quarterly Report for Q2 Ended Mar 26, 2023

Filed May 3, 2023For Securities:QCOM

Summary

Qualcomm Inc. reported revenues of $9.275 billion for the second quarter of fiscal year 2023, a decrease of 17% year-over-year, driven by a challenging macroeconomic environment impacting consumer demand and customers drawing down inventory. Net income also saw a significant decline of 42% to $1.704 billion. The company experienced a notable decrease in both its Equipment and Services (QCT) and Licensing (QTL) segments, with QCT revenues down 17% and QTL down 18% compared to the prior year's quarter. Despite the revenue decline, Qualcomm continues to invest heavily in Research and Development, with R&D expenses increasing by $176 million for the six-month period ended March 26, 2023. The company also announced a 7% increase in its quarterly dividend and continues to execute its stock repurchase program, returning capital to shareholders. Management anticipates that macroeconomic challenges and inventory drawdown will persist in the near term, impacting revenues and cash flows.

Financial Highlights

49 data points
Beta

Revenue

$9.28B

55.2% Gross Margin

Net Income

$1.70B

18.4% Net Margin

EPS (Diluted)

$1.52

Total Assets

$48.36B

Cash & Equivalents

$3.78B

Free Cash Flow

$1.46B

Financial Statements
Beta
Revenue$9.28B
Cost of Revenue$4.15B
Gross Profit$5.12B
R&D Expenses$2.21B
SG&A Expenses$614.00M
Operating Expenses$7.18B
Operating Income$2.09B
Interest Expense$179.00M
Net Income$1.70B
EPS (Basic)$1.53
EPS (Diluted)$1.52
Shares Outstanding (Basic)1.12B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Total revenues for the second quarter of fiscal 2023 were $9.275 billion, down 17% year-over-year.
  • 2Net income for the quarter was $1.704 billion, a decrease of 42% compared to the prior year.
  • 3QCT (Qualcomm CDMA Technologies) segment revenues decreased by 17% year-over-year to $7.942 billion.
  • 4QTL (Qualcomm Technology Licensing) segment revenues decreased by 18% year-over-year to $1.290 billion.
  • 5Research and Development expenses increased by 8% for the six months ended March 26, 2023, totaling $4.461 billion.
  • 6The company increased its quarterly dividend by 7% to $0.80 per share, effective after March 23, 2023.
  • 7Cash, cash equivalents, and marketable securities stood at $6.676 billion as of March 26, 2023.

Frequently Asked Questions

The primary reasons for the decline in revenue and net income are the challenging macroeconomic environment impacting consumer demand for smartphones and other devices, and customers drawing down their elevated inventory levels. This led to decreased shipments and lower revenues across both the QCT and QTL segments.

Qualcomm is returning capital to shareholders through an increased quarterly dividend, which was raised by 7% to $0.80 per share, and its ongoing stock repurchase program. As of March 26, 2023, approximately $5.9 billion remained authorized for repurchase under its $10.0 billion stock repurchase program.

Qualcomm anticipates that the current macroeconomic challenges will continue in the coming quarters, leading to ongoing negative impacts on demand, revenues, results of operations, and cash flows compared to the prior year. The company also expects continued inventory drawdowns by customers and potential price increases from semiconductor wafer suppliers.

Qualcomm is involved in several ongoing legal and regulatory proceedings, including class action lawsuits related to securities and antitrust matters, as well as investigations and appeals concerning its patent licensing practices in various jurisdictions (e.g., US, Korea, EU). While the company believes these claims are without merit, unfavorable resolutions could materially impact its business, revenues, results of operations, cash flows, and financial condition.