Smartphone chipmaker Qualcomm Inc. showed there’s still plenty of room for growth in its business today, reporting strong first quarter earnings that beat expectations and offering strong guidance for the next three month period.
Despite the upbeat report, the company’s stock fell 3% in the extended trading session.
Qualcomm reported a net income of $3.39 billion, with earnings coming in at $3.23 per share. Revenue for the period clocked in at $10.7 billion, up 30% from the same period one year ago.
That was better than expected, with Wall Street looking at earnings of just $3 per share on sales of $10.47 billion.
Qualcomm President and Chief Executive Cristiano Amon (pictured) said the results reflect continuing strong demand for the company’s products and technologies. He added that Qualcomm’s chip business revenue exceeded those of any other fabless semiconductor company in the industry.
“We are at the beginning of one of the largest opportunities in our history, with our addressable market expanding by more than seven times to approximately $700 billion in the next decade,” Amon said. “Our one technology roadmap positions us as the partner of choice for both mobile and the connected intelligent edge.”
San Diego-based Qualcomm makes the modem chips used by Apple Inc.’s iPhones and a sizable portion of the world’s other handsets to connect to carrier networks. The company also sells mobile processors that power many Android phones, as well as chips for cars and “internet of things” devices.
Qualcomm CDMA Technologies, which is the firm’s chip business, pulled in revenue of $8.85 billion in the quarter, up 35% from a year ago, though lower than the 63% growth it reported in the same quarter last year.
Within the QCT segment, Qualcomm breaks down its revenue into four categories. The biggest of those by far is handset chip sales, which rose 42% to $5.98 billion in the quarter. That growth was driven by adoption of its latest Snapdragon chipsets, which power processing and 5G connectivity in many high-end Android smartphones today.
“Android is a success story for us,” Amon said on a call with analysts.
Qualcomm has however began stepping up its efforts to diversify away from mobile devices under Amon, who took over as CEO last year. It seems to be making progress too, with automotive chip sales rising 21% to $256 million. Meanwhile the IoT chip business, which makes low-powered processors for sensors and other connected devices, saw sales rise 41% to $1.48 billion.
Qualcomm added that RF front-end chip sales came to $1.13 billion, up 7%.
Analyst Patrick Moorhead of Moor Insights & Strategy said in a tweet that Qualcomm delivered a crushing performance in the quarter, delivering record earnings and revenue.
$QCOM crushes Q1/22:
-beat on top & bottom & raise
-another record rev ($10.7B), EPS ($3.23), EBT ($4.3B) quarter
-“revs exceeding any fabless co” ?
-handsets: +42%
-RFFE: +7%
-Auto: +21%
-IoT: +41%
-good guide ($10.2-11B / $2.80-3)
-growth and diversity strategy clearly working pic.twitter.com/G4JQiUUhDs— Patrick Moorhead (@PatrickMoorhead) February 2, 2022
Qualcomm’s other main business segment is Qualcomm Technology Licensing, which collects license revenue from the thousands of patents the company holds. QTL reported $1.81 billion in revenue, up 10% from a year ago.
Amon told analysts on a call the company’s supply situation has improved compared to previous quarters.
“In simple terms, we see supply improvements and our forward guide contemplates the visibility we have in supply,” he said. “We still have more demand than supply, and we would ship more if we could.”
The improved supply situation gave Qualcomm the confidence to offer a bullish forecast for the next three months. For the second quarter, it sees earnings of between $2.80 to $3 per share and revenue of between $10.2 billion and $11 billion. That compares with Wall Street’s forecast of just $2.48 per share in earnings and $9.54 billion in revenue.
