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Qualcomm (QCOM) Q1 Earnings Beat on Healthy Revenue Growth
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Qualcomm Incorporated (QCOM - Free Report) reported solid first-quarter fiscal 2022 results with record non-GAAP earnings and revenues, driven by the ramp-up in 5G-enabled chips and a surge in demand for essential products and services that are the building blocks for digital transformation in the cloud economy. Both the bottom line and the top line increased year over year and surpassed the respective Zacks Consensus Estimate, backed by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario.
Net Income
On a GAAP basis, net income in the December quarter improved to $3,399 million or $2.98 per share from $2,455 million or $2.12 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 $3,686 million or $3.23 per share compared with $2,510 million or $2.17 per share in the year-ago quarter. Undeterred by the supply chain adversities, the non-GAAP earnings per share were largely driven by higher revenues across the board. The bottom line exceeded management’s guidance and beat the Zacks Consensus Estimate by 22 cents.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
On a GAAP basis, total revenues in the fiscal first quarter were $10,705 million compared with $8,235 million in the prior-year quarter. The increase in revenues was driven by 5G ramp-up, chip design win momentum, RF front-end demand and a rise in consumer electronics revenues with diligent execution of operational plans and resilient business culture acting as catalysts. In addition, the company witnessed strong momentum in IoT across consumer, edge networking and industrial sectors, along with strength in Snapdragon portfolio within the automotive sector. The GAAP revenues in the quarter were at the higher end of the company’s guided range.
Non-GAAP revenues in the reported quarter were $10,697 million compared with $8,226 million in the year-earlier quarter. The figure beat the consensus mark of $10,450 million, driven by 5G strength, high-performing core chipsets and new RF front-end content.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) improved 35% year over year to $8,847 million driven by strength in handsets and higher demand in adjacent platforms beyond mobile (RF front-end, automotive, and IoT), coupled with higher chip shipments. 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. The Wi-Fi 6 immersive home platforms continue to gain momentum with significant expansion in China, one of the fastest-growing markets for Wi-Fi 6 for both retail and carrier deployments. The automotive telematics and connectivity platforms, digital cockpit and C-V2X solutions are also fueling emerging automotive industry trends such as the growth in connected vehicles, the transformation of the in-car experience and vehicle electrification. The Snapdragon digital chassis is an open and scalable cloud-enabled platform for telematics, connectivity, digital cockpit and ADAS that uniquely positions Qualcomm as the leading system solution provider for silicon, software, systems and services across multiple domains. The company believes that it is on track to become the largest smartphone RF front-end supplier by revenues as RF front-end revenues of $1,132 million increased 7% year over year. While handset revenues were up 42% to $5,983 million, automotive and IoT revenues rose 21% and 41%, respectively, to $256 million and $1,476 million. EBT margin increased to 35% from 29%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,818 million, up 10% year over year, driven by higher royalty revenues from Huawei, better-than-expected global handset shipments and a favorable OEM mix. The company expects healthy revenue stream from this segment with more than 150 5G license agreements. EBT margin remained flat at 77%.
Cash Flow & Liquidity
Qualcomm generated $2,057 million of net cash from operating activities in first-quarter fiscal 2022 compared with $3,175 million a year ago. At quarter-end, the company had $6,607 million in cash and cash equivalents and $13,708 million of long-term debt. The company repurchased 8 million shares for $1.2 billion during the quarter.
Q2 Guidance
For the second quarter of fiscal 2022, Qualcomm expects GAAP revenues of $10.2-$11 billion. Non-GAAP earnings are projected to be $2.80-$3.00 per share, while GAAP earnings are likely to be $2.39-$2.59 per share. Revenues from QTL are expected between $1.45 billion and $1.65 billion. For QCT, the company anticipates revenues between $8.7 billion and $9.3 billion.
Clearfield delivered an earnings surprise of 50.7%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 102.7% since February 2021. Over the past year, Clearfield has gained a solid 85.8%.
Vocera Communications, Inc. sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 81.7%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Viavi Solutions Inc. (VIAV - Free Report) carries a Zacks Rank #2. It delivered a modest earnings surprise of 14.3%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 3.7% since February 2021, while that for the next year is up 7.3%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. The healthy growth traction is further demonstrated by the upside in wireless & fiber test, 3D sensing products, optical transport, Ethernet, broadband access, video test and storage network testing markets. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
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Qualcomm (QCOM) Q1 Earnings Beat on Healthy Revenue Growth
Qualcomm Incorporated (QCOM - Free Report) reported solid first-quarter fiscal 2022 results with record non-GAAP earnings and revenues, driven by the ramp-up in 5G-enabled chips and a surge in demand for essential products and services that are the building blocks for digital transformation in the cloud economy. Both the bottom line and the top line increased year over year and surpassed the respective Zacks Consensus Estimate, backed by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario.
Net Income
On a GAAP basis, net income in the December quarter improved to $3,399 million or $2.98 per share from $2,455 million or $2.12 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 $3,686 million or $3.23 per share compared with $2,510 million or $2.17 per share in the year-ago quarter. Undeterred by the supply chain adversities, the non-GAAP earnings per share were largely driven by higher revenues across the board. The bottom line exceeded management’s guidance and beat the Zacks Consensus Estimate by 22 cents.
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 first quarter were $10,705 million compared with $8,235 million in the prior-year quarter. The increase in revenues was driven by 5G ramp-up, chip design win momentum, RF front-end demand and a rise in consumer electronics revenues with diligent execution of operational plans and resilient business culture acting as catalysts. In addition, the company witnessed strong momentum in IoT across consumer, edge networking and industrial sectors, along with strength in Snapdragon portfolio within the automotive sector. The GAAP revenues in the quarter were at the higher end of the company’s guided range.
Non-GAAP revenues in the reported quarter were $10,697 million compared with $8,226 million in the year-earlier quarter. The figure beat the consensus mark of $10,450 million, driven by 5G strength, high-performing core chipsets and new RF front-end content.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) improved 35% year over year to $8,847 million driven by strength in handsets and higher demand in adjacent platforms beyond mobile (RF front-end, automotive, and IoT), coupled with higher chip shipments. 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. The Wi-Fi 6 immersive home platforms continue to gain momentum with significant expansion in China, one of the fastest-growing markets for Wi-Fi 6 for both retail and carrier deployments. The automotive telematics and connectivity platforms, digital cockpit and C-V2X solutions are also fueling emerging automotive industry trends such as the growth in connected vehicles, the transformation of the in-car experience and vehicle electrification. The Snapdragon digital chassis is an open and scalable cloud-enabled platform for telematics, connectivity, digital cockpit and ADAS that uniquely positions Qualcomm as the leading system solution provider for silicon, software, systems and services across multiple domains. The company believes that it is on track to become the largest smartphone RF front-end supplier by revenues as RF front-end revenues of $1,132 million increased 7% year over year. While handset revenues were up 42% to $5,983 million, automotive and IoT revenues rose 21% and 41%, respectively, to $256 million and $1,476 million. EBT margin increased to 35% from 29%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,818 million, up 10% year over year, driven by higher royalty revenues from Huawei, better-than-expected global handset shipments and a favorable OEM mix. The company expects healthy revenue stream from this segment with more than 150 5G license agreements. EBT margin remained flat at 77%.
Cash Flow & Liquidity
Qualcomm generated $2,057 million of net cash from operating activities in first-quarter fiscal 2022 compared with $3,175 million a year ago. At quarter-end, the company had $6,607 million in cash and cash equivalents and $13,708 million of long-term debt. The company repurchased 8 million shares for $1.2 billion during the quarter.
Q2 Guidance
For the second quarter of fiscal 2022, Qualcomm expects GAAP revenues of $10.2-$11 billion. Non-GAAP earnings are projected to be $2.80-$3.00 per share, while GAAP earnings are likely to be $2.39-$2.59 per share. Revenues from QTL are expected between $1.45 billion and $1.65 billion. For QCT, the company anticipates revenues between $8.7 billion and $9.3 billion.
Zacks Rank & Other Stocks to Consider
Qualcomm currently has a Zacks Rank #2 (Buy).
Clearfield, Inc. (CLFD - Free Report) , sporting a Zacks Rank #1 (Strong Buy) is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered an earnings surprise of 50.7%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 102.7% since February 2021. Over the past year, Clearfield has gained a solid 85.8%.
Vocera Communications, Inc. sports a Zacks Rank #1. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 109.6%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 81.7%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. Leveraging a patent-protected, enterprise-class server software, Vocera provides an advanced clinical rules engine that simultaneously unifies data from multiple sources, prioritizes notifications and sends messages to the right care team members. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
Viavi Solutions Inc. (VIAV - Free Report) carries a Zacks Rank #2. It delivered a modest earnings surprise of 14.3%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 3.7% since February 2021, while that for the next year is up 7.3%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. The healthy growth traction is further demonstrated by the upside in wireless & fiber test, 3D sensing products, optical transport, Ethernet, broadband access, video test and storage network testing markets. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.