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Qualcomm (QCOM) Beats Q1 Earnings Estimates on Solid Revenues
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Qualcomm Incorporated (QCOM - Free Report) reported relatively healthy first-quarter fiscal 2024 results, with the bottom and top lines beating the respective Zacks Consensus Estimate, driven by healthy demand trends in Android handsets and automotive businesses.
Both metrics improved year over year, led by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario. Consequently, shares were up post earnings release, despite expectations of a modest recovery in 2024, with the market for Internet-connected appliances remaining sluggish.
Net Income
On a GAAP basis, net income in the December quarter improved to $2.8 billion or $2.46 per share from $2.2 billion or $1.98 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 $3.1 billion or $2.75 per share compared with $2.7 billion or $2.37 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 37 cents.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
On a GAAP basis, total revenues in the fiscal first quarter were $9.9 billion compared with $9.5 billion in the prior-year quarter. The quarterly revenues beat the consensus mark of $9.5 billion. Despite soft industrial IoT demand patterns, Qualcomm registered record automotive revenues owing to solid momentum from the Snapdragon Digital Chassis platform. Strength within the handset business also buoyed the top line. Non-GAAP revenues in the reported quarter were $9.9 billion compared with $9.5 billion in the year-earlier quarter.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) were up 7% year over year to $8.4 billion, as strength in the automotive platform and higher demand in handsets was partially offset by channel inventory drawdown within the IoT business. The segment’s revenues exceeded our revenue estimates of $8.1 billion. The company witnessed solid market traction in the EDGE networking business that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.
Automotive revenues rose 31% to $598 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform. This was the 13th consecutive quarter in which Qualcomm recorded double-digit growth in automotive revenues. Handset revenues were up 16% to $6.7 billion, primarily led by the increased deployment of the Snapdragon 8 Gen 3 mobile platform in new Android flagship launches. However, IoT revenues were down 32% to $1.1 billion due to the channel inventory drawdown. EBT margin for the QCT segment rose to 31% from 28%.
Qualcomm Technology Licensing (QTL) revenues totaled $1.5 billion, down 4% year over year due to lower licensing revenues. The segment’s revenues beat our estimates of $1.4 billion. EBT margin declined to 74% from 73%.
Cash Flow & Liquidity
Qualcomm generated $2.9 billion of net cash from operating activities in the fiscal first quarter compared with $3.1 billion a year ago. At quarter-end, the company had $8.1 billion in cash and cash equivalents and $14.6 billion of long-term debt. The company repurchased 6 million shares for $784 million during the quarter.
Q2 Guidance
For the second quarter of fiscal 2024, Qualcomm expects GAAP revenues of $8.9-$9.7 billion due to market stabilization, recovery in market demand and portfolio strength. Non-GAAP earnings are projected to be $2.20-$2.40 per share, while GAAP earnings are likely to be $1.73-$1.93 per share. Revenues from QTL are expected to be between $1.2 billion and $1.4 billion. For QCT, the company anticipates revenues between $7.6 billion and $8.2 billion.
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 19.8% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 (Buy) stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.
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Qualcomm (QCOM) Beats Q1 Earnings Estimates on Solid Revenues
Qualcomm Incorporated (QCOM - Free Report) reported relatively healthy first-quarter fiscal 2024 results, with the bottom and top lines beating the respective Zacks Consensus Estimate, driven by healthy demand trends in Android handsets and automotive businesses.
Both metrics improved year over year, led by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario. Consequently, shares were up post earnings release, despite expectations of a modest recovery in 2024, with the market for Internet-connected appliances remaining sluggish.
Net Income
On a GAAP basis, net income in the December quarter improved to $2.8 billion or $2.46 per share from $2.2 billion or $1.98 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 $3.1 billion or $2.75 per share compared with $2.7 billion or $2.37 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 37 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 $9.9 billion compared with $9.5 billion in the prior-year quarter. The quarterly revenues beat the consensus mark of $9.5 billion. Despite soft industrial IoT demand patterns, Qualcomm registered record automotive revenues owing to solid momentum from the Snapdragon Digital Chassis platform. Strength within the handset business also buoyed the top line. Non-GAAP revenues in the reported quarter were $9.9 billion compared with $9.5 billion in the year-earlier quarter.
Segment Results
Quarterly revenues from Qualcomm CDMA Technologies (QCT) were up 7% year over year to $8.4 billion, as strength in the automotive platform and higher demand in handsets was partially offset by channel inventory drawdown within the IoT business. The segment’s revenues exceeded our revenue estimates of $8.1 billion. The company witnessed solid market traction in the EDGE networking business that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.
Automotive revenues rose 31% to $598 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform. This was the 13th consecutive quarter in which Qualcomm recorded double-digit growth in automotive revenues. Handset revenues were up 16% to $6.7 billion, primarily led by the increased deployment of the Snapdragon 8 Gen 3 mobile platform in new Android flagship launches. However, IoT revenues were down 32% to $1.1 billion due to the channel inventory drawdown. EBT margin for the QCT segment rose to 31% from 28%.
Qualcomm Technology Licensing (QTL) revenues totaled $1.5 billion, down 4% year over year due to lower licensing revenues. The segment’s revenues beat our estimates of $1.4 billion. EBT margin declined to 74% from 73%.
Cash Flow & Liquidity
Qualcomm generated $2.9 billion of net cash from operating activities in the fiscal first quarter compared with $3.1 billion a year ago. At quarter-end, the company had $8.1 billion in cash and cash equivalents and $14.6 billion of long-term debt. The company repurchased 6 million shares for $784 million during the quarter.
Q2 Guidance
For the second quarter of fiscal 2024, Qualcomm expects GAAP revenues of $8.9-$9.7 billion due to market stabilization, recovery in market demand and portfolio strength. Non-GAAP earnings are projected to be $2.20-$2.40 per share, while GAAP earnings are likely to be $1.73-$1.93 per share. Revenues from QTL are expected to be between $1.2 billion and $1.4 billion. For QCT, the company anticipates revenues between $7.6 billion and $8.2 billion.
Zacks Rank & Stocks to Consider
Qualcomm currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 19.8% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #2 (Buy) stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , carrying a Zacks Rank #2, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.