01—Abstract
Summary
Summary of the 10-Q filed July 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Qualcomm Incorporated's (QCOM) 10-Q filing for the period ending June 28, 2026, reveals a decrease in total revenues to $9.9 billiona for the third quarter, down 4% year-over-year, and a significant 25% drop in net income to $2.0 billion.
This performance was primarily driven by a 5% decline in QCT (Qualcomm CDMA Technologies) segment revenues, largely due to lower handset revenues, though partially offset by growth in automotive and IoT segments. Licensing revenues (QTL) saw a modest 3% decrease. The company reported a substantial $5.7 billionb income tax benefit in the second quarter of fiscal 2026 due to the release of a valuation allowance on federal deferred tax assets, significantly impacting the year-to-date net income and overall effective tax rate.
Looking ahead, Qualcomm anticipates continued headwinds in the handset market due to memory supply constraints and pricing increases impacting customer demand. The company also notes increasing input costs and capacity constraints in the broader semiconductor industry. Despite these challenges, Qualcomm continues to invest in growth and diversification, particularly in AI, automotive, and IoT.
The company also announced two significant acquisitions: Alphawave IP Group plc for $2.3 billionc to bolster its data center business and Modular Inc. for approximately $3.1 billion to strengthen its AI software foundation. These strategic moves signal a focus on long-term growth beyond traditional mobile markets.
02—Key points
Key Highlights
- Total revenues for the third quarter of fiscal 2026 were $9.9 billion, a 4% decrease year-over-year.
- Net income for the third quarter decreased by 25% to $2.0 billion, impacted by a 5% decline in QCT revenues due to lower handset demand.
- Significant $5.7 billion income tax benefit recognized in Q2 fiscal 2026 due to the release of a valuation allowance on federal deferred tax assets.
- QCT segment saw mixed performance with lower handset revenues but growth in automotive and IoT sectors.
- Licensing (QTL) revenues decreased slightly by 3% year-over-year in the third quarter.
- The company completed two significant acquisitions: Alphawave for $2.3 billion and Modular Inc. for approximately $3.1 billion, aimed at expanding into data center and AI software markets.
- Qualcomm expects continued challenges in the handset market due to memory supply constraints impacting customer build plans.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Qualcomm Inc kept $0.20.
- Revenue$9.95B100.0%
- Cost of revenue−$4.67B46.9%
- Gross profit$5.28B53.1%
- Operating costs−$3.65B36.7%
- Operating income$1.63B16.3%
- Interest, other & tax$376.0M3.8%
- Net income$2.00B20.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed July 29, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $9.95B$10.37B | −4.0% |
| Cost of Revenue | $4.67B$4.61B | +1.4% |
| Gross Profit | $5.28B$5.76B | −8.4% |
| R&D Expenses | $2.61B$2.23B | +17.1% |
| SG&A Expenses | $976.00M$771.00M | +26.6% |
| Operating Expenses | $8.32B$7.60B | +9.4% |
| Operating Income | $1.63B$2.76B | −41.1% |
| Interest Expense | $178.00M$168.00M | +6.0% |
| Net Income | $2.00B$2.67B | −24.9% |
| EPS (Basic) | $1.89$2.44 | −22.5% |
| EPS (Diluted) | $1.87$2.43 | −23.0% |
| Shares Outstanding (Basic) | 1.06B1.09B | −3.2% |
| Shares Outstanding (Diluted) | 1.07B1.10B | −2.7% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the decrease in QCT revenues?
The primary driver behind the decrease in QCT revenues is lower handset revenues, primarily due to reduced chipset shipments to certain major OEMs. This is attributed to customers adjusting their build plans to reduce inventory levels, influenced by memory supply constraints and related price increases.
What caused the significant income tax benefit in the second quarter of fiscal 2026?
The significant $5.7 billion income tax benefit in the second quarter of fiscal 2026 resulted from the release of a valuation allowance previously established on federal deferred tax assets. This was triggered by a U.S. Department of Treasury and IRS notice (Notice 2026-07) that allows a reduction in the Corporate Alternative Minimum Tax (CAMT) by certain capitalized domestic R&D expenditures, leading Qualcomm to no longer expect being subject to CAMT and thus expecting to realize its federal deferred tax assets.
How are the recent acquisitions expected to impact Qualcomm's business?
Qualcomm completed two significant acquisitions: Alphawave IP Group plc for $2.3 billion, which is expected to accelerate its expansion into data centers, and Modular Inc. for approximately $3.1 billion, which is expected to strengthen its software foundation for generative and agentic AI across data center and edge environments. These acquisitions indicate a strategic focus on diversifying and growing beyond traditional mobile markets.
What are the key challenges Qualcomm anticipates in the near future?
Qualcomm anticipates challenges including continued adverse impacts on demand from handset OEMs due to recent memory supply constraints and pricing increases. Additionally, the semiconductor industry is experiencing broad-based increases in input costs and capacity constraints. The company also faces ongoing intense competition, including from vertical integration by customers like Apple, and potential impacts from global trade policies and U.S./China trade relations.
06—Continue