10-QPeriod: Q3 FY2023

QUALCOMM INC/DE Quarterly Report for Q3 Ended Jun 25, 2023

Filed August 2, 2023For Securities:QCOM

Summary

QUALCOMM Incorporated (QCOM) reported a notable decrease in revenues and net income for the third quarter of fiscal year 2023 compared to the prior year. Total revenues were $8.5 billion, down 23%, while net income fell by 52% to $1.8 billion. This downturn was primarily attributed to a challenging macroeconomic environment impacting consumer demand for smartphones and other devices, coupled with customers reducing their elevated inventory levels. Despite the revenue decline, the company maintained a strong cash position, with cash, cash equivalents, and marketable securities totaling $8.6 billion. QCOM also returned capital to shareholders through dividends and stock repurchases. The company continues to invest in its key growth areas, particularly in automotive and IoT, anticipating long-term growth driven by 5G technology and increased integration into non-mobile applications. However, ongoing macroeconomic headwinds and inventory destocking by customers are expected to continue impacting near-term financial performance.

Financial Highlights

48 data points
Beta

Revenue

$8.45B

55.1% Gross Margin

Net Income

$1.80B

21.3% Net Margin

EPS (Diluted)

$1.60

Total Assets

$49.00B

Cash & Equivalents

$6.18B

Free Cash Flow

$2.66B

Financial Statements
Beta
Revenue$8.45B
Cost of Revenue$3.79B
Gross Profit$4.66B
R&D Expenses$2.22B
SG&A Expenses$618.00M
Operating Expenses$6.63B
Operating Income$1.82B
Interest Expense$172.00M
Net Income$1.80B
EPS (Basic)$1.62
EPS (Diluted)$1.60
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Total revenues for the third quarter of fiscal 2023 were $8.5 billion, a 23% decrease year-over-year, reflecting a challenging macroeconomic environment and customer inventory drawdowns.
  • 2Net income for the quarter was $1.8 billion, a 52% decrease compared to the prior year's quarter.
  • 3QCT (Qualcomm CDMA Technologies) revenues decreased by 24% year-over-year, primarily due to lower handset and IoT revenues.
  • 4QTL (Qualcomm Technology Licensing) revenues declined by 19% year-over-year.
  • 5The company reported strong liquidity with $8.6 billion in cash, cash equivalents, and marketable securities as of June 25, 2023.
  • 6QCOM continues to return capital to shareholders, with $2.6 billion paid in dividends and $3.7 billion in stock repurchases for the nine months ended June 25, 2023.
  • 7Qualcomm anticipates continued macroeconomic challenges and inventory destocking impacting near-term performance but remains focused on long-term growth drivers like 5G, automotive, and IoT.

Frequently Asked Questions

The decline in revenue and net income is primarily attributed to a weak macroeconomic environment that has reduced consumer demand for smartphones and other devices incorporating Qualcomm's products. Additionally, customers are working through elevated inventory levels, leading them to reduce their purchases from Qualcomm.

QUALCOMM maintains a strong liquidity position with $8.6 billion in cash, cash equivalents, and marketable securities as of June 25, 2023. The company is actively returning capital to shareholders through consistent dividend payments and a significant stock repurchase program.

Qualcomm expects the current macroeconomic challenges and inventory destocking to continue impacting its financial performance in the near term. However, the company sees long-term growth potential driven by the expansion of 5G technology and increased adoption in sectors beyond mobile, such as automotive and the Internet of Things (IoT).

Qualcomm is involved in several ongoing legal and regulatory proceedings, including antitrust and competition-related matters in various jurisdictions. While the company believes these claims are without merit, adverse resolutions could potentially have a material impact on its business, results of operations, financial condition, or cash flows.