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Qualcomm (QCOM) Beats Q2 Earnings Estimates on Record Revenues
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Qualcomm Incorporated (QCOM - Free Report) reported solid second-quarter fiscal 2022 results with record 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 March quarter improved to $2,934 million or $2.57 per share from $1,762 million or $1.53 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 $3,661 million or $3.21 per share compared with $2,185 million or $1.90 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 exceeded management’s guidance and beat the Zacks Consensus Estimate by 30 cents.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
On a GAAP basis, total revenues in the fiscal second quarter were $11,164 million compared with $7,935 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, Qualcomm 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 exceeded the company’s guided range.
Non-GAAP revenues in the reported quarter were $11,158 million compared with $7,925 million in the year-earlier quarter. The figure beat the consensus mark of $10,579 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 52% year over year to $9,548 million, driven by strength in handsets and higher demand in adjacent platforms beyond mobile (RF front-end, 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. The Wi-Fi 6 immersive home platforms continue to gain momentum. 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 Advanced Driver Assistance Systems (ADAS) that uniquely positions Qualcomm as the leading system solution provider for silicon, software, systems and services across multiple domains. RF front-end revenues of $1,160 million increased 28% year over year with solid demand for a fifth-generation modem-RF system that boasts advanced features such as AI integration, millimeter-wave and 5G connectivity. Handset revenues were up 56% to $6,325 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 41% and 61%, respectively, to $339 million and $1,724 million. EBT margin increased to 35% from 25%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,580 million, down 2% year over year due to a decline in revenues from lower-tier units. The company expects a healthy revenue stream from this segment with more than 150 5G license agreements. EBT margin decreased marginally to 73%.
Cash Flow & Liquidity
Qualcomm generated $2,698 million of net cash from operating activities in second-quarter fiscal 2022 compared with $2,911 million a year ago, bringing the respective tallies for the first six months of the fiscal to $4,755 million and $6,086 million. At the quarter-end, the company had $7,173 million in cash and cash equivalents and $12,195 million of long-term debt. The company repurchased 6 million shares for $951 million during the quarter.
Q3 Guidance
For the third quarter of fiscal 2022, Qualcomm expects GAAP revenues of $10.5-$11.3 billion. Non-GAAP earnings are projected to be $2.75-$2.95 per share, while GAAP earnings are likely to be $2.35-$2.55 per share. Revenues from QTL are expected to be between $1.4 billion and $1.6 billion. For QCT, the company anticipates revenues between $9.1 billion and $9.6 billion.
Nokia Corporation (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick for investors in the industry. Earnings estimates for the current year for the stock have moved up 40% since April 2021.
Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average and has a long-term earnings growth expectation of 10.4%. It has moved up 7.9% in the past year. Nokia is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. The company’s deal win rate is encouraging, with notable successes in the key 5G markets of the United States and China.
Viasat, Inc. (VSAT - Free Report) , carrying a Zacks Rank #2, is another key pick. It pulled off a trailing four-quarter earnings surprise of 129.9%, on average. The company attracts millions of U.S. consumers and enterprises with its high-quality broadband service.
Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. Viasat has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, making it believe that mobile broadband will act as a profit churner.
KVH Industries, Inc. (KVHI - Free Report) , a Zacks Rank #2 stock, delivered an earnings surprise of 20%, on average, in the trailing four quarters.
Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.
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Qualcomm (QCOM) Beats Q2 Earnings Estimates on Record Revenues
Qualcomm Incorporated (QCOM - Free Report) reported solid second-quarter fiscal 2022 results with record 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 March quarter improved to $2,934 million or $2.57 per share from $1,762 million or $1.53 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 $3,661 million or $3.21 per share compared with $2,185 million or $1.90 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 exceeded management’s guidance and beat the Zacks Consensus Estimate by 30 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 second quarter were $11,164 million compared with $7,935 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, Qualcomm 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 exceeded the company’s guided range.
Non-GAAP revenues in the reported quarter were $11,158 million compared with $7,925 million in the year-earlier quarter. The figure beat the consensus mark of $10,579 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 52% year over year to $9,548 million, driven by strength in handsets and higher demand in adjacent platforms beyond mobile (RF front-end, 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. The Wi-Fi 6 immersive home platforms continue to gain momentum. 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 Advanced Driver Assistance Systems (ADAS) that uniquely positions Qualcomm as the leading system solution provider for silicon, software, systems and services across multiple domains. RF front-end revenues of $1,160 million increased 28% year over year with solid demand for a fifth-generation modem-RF system that boasts advanced features such as AI integration, millimeter-wave and 5G connectivity. Handset revenues were up 56% to $6,325 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 41% and 61%, respectively, to $339 million and $1,724 million. EBT margin increased to 35% from 25%.
Qualcomm Technology Licensing (QTL) revenues totaled $1,580 million, down 2% year over year due to a decline in revenues from lower-tier units. The company expects a healthy revenue stream from this segment with more than 150 5G license agreements. EBT margin decreased marginally to 73%.
Cash Flow & Liquidity
Qualcomm generated $2,698 million of net cash from operating activities in second-quarter fiscal 2022 compared with $2,911 million a year ago, bringing the respective tallies for the first six months of the fiscal to $4,755 million and $6,086 million. At the quarter-end, the company had $7,173 million in cash and cash equivalents and $12,195 million of long-term debt. The company repurchased 6 million shares for $951 million during the quarter.
Q3 Guidance
For the third quarter of fiscal 2022, Qualcomm expects GAAP revenues of $10.5-$11.3 billion. Non-GAAP earnings are projected to be $2.75-$2.95 per share, while GAAP earnings are likely to be $2.35-$2.55 per share. Revenues from QTL are expected to be between $1.4 billion and $1.6 billion. For QCT, the company anticipates revenues between $9.1 billion and $9.6 billion.
Zacks Rank & Stocks to Consider
Qualcomm currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Sell) stocks here.
Nokia Corporation (NOK - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick for investors in the industry. Earnings estimates for the current year for the stock have moved up 40% since April 2021.
Nokia pulled off a trailing four-quarter earnings surprise of 205.2%, on average and has a long-term earnings growth expectation of 10.4%. It has moved up 7.9% in the past year. Nokia is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio. The company’s deal win rate is encouraging, with notable successes in the key 5G markets of the United States and China.
Viasat, Inc. (VSAT - Free Report) , carrying a Zacks Rank #2, is another key pick. It pulled off a trailing four-quarter earnings surprise of 129.9%, on average. The company attracts millions of U.S. consumers and enterprises with its high-quality broadband service.
Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. Viasat has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, making it believe that mobile broadband will act as a profit churner.
KVH Industries, Inc. (KVHI - Free Report) , a Zacks Rank #2 stock, delivered an earnings surprise of 20%, on average, in the trailing four quarters.
Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.