On Wednesday, Qualcomm Incorporated (NASDAQ: QCOM) reported its fiscal third-quarter earnings, which beat Wall Street estimates while also giving a strong outlook for the current quarter. While both the top and bottom lines slightly beat estimates, it wasn’t enough to get the market excited.
Third fiscal quarter highlights
For the quarter ended June 23, Qualcomm reported adjusted revenue of $9.39 billion, beating LSEG’s estimate of $9.22 billion. Revenue grew 11% year over year.
The chip business, or more precisely the three hardware lines, reported collectively, with QCT reporting revenues up 12% year-over-year to generate $8.1 billion in revenue.
The mobile phone business grew 12% year-on-year to $5.9 billion, signaling a recovery after a two-year slump in smartphone sales. When it comes to the smartphone market, the summer months are typically a quieter part of the annual cycle.
Internet of Things company Meta Platforms (NASDAQ: META), which sells chips for low-cost devices and Quest headsets, saw revenue fall 8% year over year to $1.4 billion but still beat StreetAccount’s estimate of $641.7 million. In 2022, Meta and Qualcomm entered into a partnership to deliver multi-generational metaverse experiences. While Qualcomm’s deal with Meta is a broad, multi-year strategic collaboration, the metaverse still hasn’t come to life two years later. While Meta and Mark Zuckerberg aren’t giving up on the metaverse, they have been talking more about generative AI.
Licensing revenue from collecting fees from companies that integrate 5G or other mobile technologies into their products rose 3% to $1.3 billion.
Automotive revenue grew 87% year over year to $811 million, beating the StreetAccount consensus estimate of $641.7 million. While automotive chips remain a small part of Qualcomm’s overall revenue stream, it is seen as one of its biggest future growth and diversification opportunities.
Earnings grew 18% YoY, with net income coming in at $2.13 billion, or $1.88 per share. Adjusted earnings rose 25% YoY to $2.33 per share.
Current quarterly forecast indicates improvement is on the way
Qualcomm issued a revenue forecast of between $9.5 billion and $10.3 billion, with earnings per share of between $2.38 and $2.58. Looking at the mid-range, that guidance represents a 14% improvement in revenue from the previous quarter, along with a 26% improvement for the bottom line. However, CEO Cristiano Amon did indicate that the recovery in the smartphone market won’t be quick, pointing to fairly flat to low-single digit growth.
The tide appears to be turning for Qualcomm.
While the smartphone market slump has dragged Qualcomm’s finances down over the past three years, the latest results suggest that growth appears to be back on track. Moreover, the growth of the AI-enabled smartphone market should help the company maintain its newfound growth momentum.
DISCLAIMER: This content is for informational purposes only. It is not intended as investment advice.
This article is from an unpaid outside contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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This article Qualcomm’s Fortunes Seem To Be Turning Around originally appeared on Benzinga.com
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