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Qualcomm (QCOM) Tops Q4 Earnings Estimates on Record Revenues
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Qualcomm Incorporated (QCOM - Free Report) reported solid fourth-quarter fiscal 2022 results driven by record revenues and continued focus on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge. Both the bottom line and the top line increased year over year and surpassed the respective Zacks Consensus Estimate on the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario. However, shares declined sharply post earnings release owing to a soft outlook due to macroeconomic uncertainty and high channel inventory levels.
Net Income
On a GAAP basis, net income in the September quarter improved to $2,873 million or $2.54 per share from $2,798 million or $2.45 per share in the prior-year quarter. The increase in GAAP earnings was primarily attributable to top-line growth.
Quarterly non-GAAP net income came in at $3,548 million or $3.13 per share compared with $2,916 million or $2.55 per share in the year-ago quarter. The non-GAAP earnings per share were largely driven by higher revenues across the board. The bottom line beat the Zacks Consensus Estimate by a penny.
In fiscal 2022, GAAP net income improved to $12,936 million or $11.37 per share from $9,043 million or $7.87 per share in fiscal 2021. Non-GAAP net income came in at $14,254 million or $12.53 per share compared with $9,811 million or $8.54 per share in fiscal 2021.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
On a GAAP basis, total revenues in the fiscal fourth quarter were $11,396 million compared with $9,336 million in the prior-year quarter. The increase in revenues was driven by 5G ramp-up, chip design win momentum and solid automotive revenues with diligent execution of operational plans and resilient business culture acting as catalysts. In addition, Qualcomm witnessed strong momentum in IoT across consumer, edge networking and industrial sectors, along with strength in Snapdragon portfolio within the automotive sector.
Non-GAAP revenues in the reported quarter were $11,387 million compared with $9,321 million in the year-earlier quarter. The figure beat the consensus mark of $11,382 million, driven by 5G strength, high-performing core chipsets and new RF front-end content.
In fiscal 2022, GAAP revenues improved to $44,200 million from $33,566 million in fiscal 2021, while non-GAAP revenues were up to $44,169 million from $33,467 million.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) improved 28% year over year to $9,904 million, driven by strength in handsets and higher demand in adjacent platforms beyond mobile (automotive and IoT). The company is witnessing healthy traction in EDGE networking that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.
RF front-end revenues of $992 million decreased 20% year over year owing to weakness in the handset market and high channel inventory. Handset revenues were up 40% to $6,570 million with continued traction from leading smartphone OEMs such as Samsung, Xiaomi, Oppo, Vivo and Honor, and increased adoption of Snapdragon mobile technology platform for premium and high-tier Android. Automotive and IoT revenues rose 58% and 24%, respectively, to $427 million and $1,915 million. EBT margin increased to 34% from 32%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,441 million, down 8% year over year due to lower licensing revenues. EBT margin declined to 69% from 72%.
Cash Flow & Liquidity
Qualcomm generated $1,446 million of net cash from operating activities in the fiscal fourth quarter compared with $1,077 million a year ago, bringing the respective tallies for fiscal 2022 and fiscal 2021 to $9,096 million and $10,536 million. At the fiscal-end, the company had $2,773 million in cash and cash equivalents and $13,537 million of long-term debt compared with the respective tallies of $7,116 million and $13,701 million in the prior-year period. The company repurchased 3 million shares for $500 million during the quarter.
Q1 Guidance
For the first quarter of fiscal 2023, Qualcomm expects GAAP revenues of $9.2-$10 billion due to rapid deterioration in demand and high channel inventory amid a challenging macroeconomic environment and uncertainty. Non-GAAP earnings are projected to be $2.25-$2.45 per share, while GAAP earnings are likely to be $1.72-$1.92 per share. Revenues from QTL are expected to be between $1.45 billion and $1.65 billion. For QCT, the company anticipates revenues between $7.7 billion and $8.3 billion.
Sierra Wireless has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 229.9%, on average, in the trailing four quarters. Over the past year, the stock has gained 80.3%. Earnings estimates for the current year have moved up 4400% since October 2021. Sierra Wireless continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1, is another key pick for investors. It has a long-term earnings growth expectation of 25% and delivered a stellar earnings surprise of 81.9%, on average, in the trailing four quarters.
InterDigital is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. The company aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas. InterDigital’s global footprint, diversified product portfolio and ability to penetrate different markets are impressive.
Comtech Telecommunications Corp. (CMTL - Free Report) , sporting a Zacks Rank #1, is another key pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data throughput. It holds leadership positions in the market for high-throughput modems used in cellular backhaul.
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Qualcomm (QCOM) Tops Q4 Earnings Estimates on Record Revenues
Qualcomm Incorporated (QCOM - Free Report) reported solid fourth-quarter fiscal 2022 results driven by record revenues and continued focus on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge. Both the bottom line and the top line increased year over year and surpassed the respective Zacks Consensus Estimate on the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario. However, shares declined sharply post earnings release owing to a soft outlook due to macroeconomic uncertainty and high channel inventory levels.
Net Income
On a GAAP basis, net income in the September quarter improved to $2,873 million or $2.54 per share from $2,798 million or $2.45 per share in the prior-year quarter. The increase in GAAP earnings was primarily attributable to top-line growth.
Quarterly non-GAAP net income came in at $3,548 million or $3.13 per share compared with $2,916 million or $2.55 per share in the year-ago quarter. The non-GAAP earnings per share were largely driven by higher revenues across the board. The bottom line beat the Zacks Consensus Estimate by a penny.
In fiscal 2022, GAAP net income improved to $12,936 million or $11.37 per share from $9,043 million or $7.87 per share in fiscal 2021. Non-GAAP net income came in at $14,254 million or $12.53 per share compared with $9,811 million or $8.54 per share in fiscal 2021.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
QUALCOMM Incorporated price-consensus-eps-surprise-chart | QUALCOMM Incorporated Quote
Revenues
On a GAAP basis, total revenues in the fiscal fourth quarter were $11,396 million compared with $9,336 million in the prior-year quarter. The increase in revenues was driven by 5G ramp-up, chip design win momentum and solid automotive revenues with diligent execution of operational plans and resilient business culture acting as catalysts. In addition, Qualcomm witnessed strong momentum in IoT across consumer, edge networking and industrial sectors, along with strength in Snapdragon portfolio within the automotive sector.
Non-GAAP revenues in the reported quarter were $11,387 million compared with $9,321 million in the year-earlier quarter. The figure beat the consensus mark of $11,382 million, driven by 5G strength, high-performing core chipsets and new RF front-end content.
In fiscal 2022, GAAP revenues improved to $44,200 million from $33,566 million in fiscal 2021, while non-GAAP revenues were up to $44,169 million from $33,467 million.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) improved 28% year over year to $9,904 million, driven by strength in handsets and higher demand in adjacent platforms beyond mobile (automotive and IoT). The company is witnessing healthy traction in EDGE networking that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.
RF front-end revenues of $992 million decreased 20% year over year owing to weakness in the handset market and high channel inventory. Handset revenues were up 40% to $6,570 million with continued traction from leading smartphone OEMs such as Samsung, Xiaomi, Oppo, Vivo and Honor, and increased adoption of Snapdragon mobile technology platform for premium and high-tier Android. Automotive and IoT revenues rose 58% and 24%, respectively, to $427 million and $1,915 million. EBT margin increased to 34% from 32%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,441 million, down 8% year over year due to lower licensing revenues. EBT margin declined to 69% from 72%.
Cash Flow & Liquidity
Qualcomm generated $1,446 million of net cash from operating activities in the fiscal fourth quarter compared with $1,077 million a year ago, bringing the respective tallies for fiscal 2022 and fiscal 2021 to $9,096 million and $10,536 million. At the fiscal-end, the company had $2,773 million in cash and cash equivalents and $13,537 million of long-term debt compared with the respective tallies of $7,116 million and $13,701 million in the prior-year period. The company repurchased 3 million shares for $500 million during the quarter.
Q1 Guidance
For the first quarter of fiscal 2023, Qualcomm expects GAAP revenues of $9.2-$10 billion due to rapid deterioration in demand and high channel inventory amid a challenging macroeconomic environment and uncertainty. Non-GAAP earnings are projected to be $2.25-$2.45 per share, while GAAP earnings are likely to be $1.72-$1.92 per share. Revenues from QTL are expected to be between $1.45 billion and $1.65 billion. For QCT, the company anticipates revenues between $7.7 billion and $8.3 billion.
Zacks Rank & Stocks to Consider
Qualcomm currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the industry is Sierra Wireless, Inc. , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sierra Wireless has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 229.9%, on average, in the trailing four quarters. Over the past year, the stock has gained 80.3%. Earnings estimates for the current year have moved up 4400% since October 2021. Sierra Wireless continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1, is another key pick for investors. It has a long-term earnings growth expectation of 25% and delivered a stellar earnings surprise of 81.9%, on average, in the trailing four quarters.
InterDigital is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. The company aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas. InterDigital’s global footprint, diversified product portfolio and ability to penetrate different markets are impressive.
Comtech Telecommunications Corp. (CMTL - Free Report) , sporting a Zacks Rank #1, is another key pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data throughput. It holds leadership positions in the market for high-throughput modems used in cellular backhaul.