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Qualcomm (QCOM) Q2 Earnings & Revenues Top Estimates, Up Y/Y

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Qualcomm Incorporated (QCOM - Free Report) reported solid second-quarter fiscal 2021 results, wherein both the bottom line and the top line beat the respective Zacks Consensus Estimate.

Despite a challenging environment, the results reflect the importance of the company’s technologies, not only to the mobile industry but across several others.

Net Income

On a GAAP basis, net income in the March quarter was $1,762 million or $1.53 per share compared with $468 million or 41 cents per share in the prior-year quarter. The growth primarily resulted from higher operating income.   

Non-GAAP net income came in at $2,185 million or $1.90 per share compared with $1,015 million or 88 cents per share in the year-ago quarter. This reflects higher licensing revenues and solid performance in the chipset business. Also, the bottom line beat the Zacks Consensus Estimate by 23 cents, delivering a surprise of 13.8%.

QUALCOMM Incorporated Price, Consensus and EPS Surprise QUALCOMM Incorporated Price, Consensus and EPS Surprise

QUALCOMM Incorporated price-consensus-eps-surprise-chart | QUALCOMM Incorporated Quote

Revenues

Quarterly total GAAP revenues grew to $7,935 million from $5,216 million reported in the prior-year quarter. The growth was driven by strength across Qualcomm CDMA Technologies (QCT) and Qualcomm Technology Licensing (QTL). The company benefited from robust demand for smartphones globally and its ability to increase the scale of non-handset revenues.

Non-GAAP revenues were $7,925 million compared with $5,206 million in the year-ago quarter. Also, the top line surpassed the consensus estimate of $7,626 million.

Segment Results

Revenues in QCT increased 53.2% year over year to $6,281 million. The company delivered on its commitment to increase operating leverage. The growth was driven by strength in handsets and higher demand in adjacent platforms beyond mobile (RF front-end, automotive and IoT). EBT margin increased to 25% from 16%, thanks to favorable product mix and gross margins.

QTL revenues totaled $1,614 million, up 50.6%. The performance was primarily driven by stronger handset shipments, especially in China. EBT margin was 74% compared with 63% in the year-ago quarter.

Other Details

Total expenses increased to $5,769 million from $4,225 million year over year. Operating income came in at $2,166 million, up from $991 million. EBT was $2,129 million compared with $598 million a year ago.

Cash Flow & Liquidity

In the first six months of fiscal 2021, Qualcomm generated $6,086 million of net cash from operating activities compared with $2,201 million in the year-ago period.  As of Mar 28, 2021, the company had $6,000 million in cash and cash equivalents with $15,235 million of long-term debt.

Q3 Guidance

For the fiscal third quarter, Qualcomm expects GAAP revenues of $7.1-$7.9 billion. In QCT, the company anticipates revenues between $5.8 billion and $6.3 billion. Revenues in QTL are expected between $1.35 billion and $1.55 billion. While non-GAAP earnings are projected to be $1.55-$1.75 per share, GAAP earnings are likely to be $1.24-$1.44 per share.

Zacks Rank & Stocks to Consider

Qualcomm currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Vicor Corporation (VICR - Free Report) , Micron Technology (MU - Free Report) and Western Digital Corporation (WDC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vicor delivered a trailing four-quarter earnings surprise of 80.6%, on average.

Micron delivered a trailing four-quarter earnings surprise of 6.5%, on average.

Western Digital delivered a trailing four-quarter earnings surprise of 10.9%, on average. 

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