EPS of $1.88 increased by 17.9% from previous year
Gross margin of 55.6%
Net income of 2.13B
""The automotive sector is becoming a major contributor to our revenue, with significant wins reflecting our diversification strategy." - Cristiano Amon." - Cristiano Amon
In Q3 2024, QUALCOMM Incorporated delivered robust financial results with revenues amounting to $9.4 billion, showing a sequential increase in their chipset business. The solid performance reflects a diversification strategy that is yielding positive results across automotive, internet of things (IoT), and Snapdragon mobile platforms. Notably, net income reached $2.13 billion, corresponding to a diluted EPS of $1.88. Management remains optimistic for continued growth, particularly in the automotive sector where significant design wins were achieved. Future guidance suggests a stable performance through Q4, thus enhancing confidence in QUALCOMM's resilience amid industry transitions.
Management’s commentary underscored the importance of on-device AI integration across various products, with anticipated growth in sectors such as automotive computing and consumer devices further sharpening their competitive edge against peers.
Key Performance Indicators
Revenue
9.39B
QoQ: 0.04% | YoY:11.15%
Gross Profit
5.22B
55.56% margin
QoQ: -1.21% | YoY:12.02%
Operating Income
2.30B
QoQ: -1.88% | YoY:25.95%
Net Income
2.13B
QoQ: -8.47% | YoY:18.08%
EPS
1.91
QoQ: -8.17% | YoY:17.90%
Revenue Trend
Margin Analysis
Key Insights
**Total Revenue**: $9.4 billion, up 11.15% YoY and 0.04% QoQ.
- **Net Income**: $2.13 billion, an 18.08% increase YoY; EPS at $1.88 reflects a 17.90% YoY increase.
**Qualcomm CDMA Technologies (QCT)**: Generated $8.1 billion with a notable 34% QoQ growth in automotive revenues (specifically to $811 million).
- **Qualcomm Technology Licensing (QTL)**: Reported revenues of $1.3 billion with an EBT margin of 70%.
Gross Profit Margin: 55.6%
- Operating Income Margin: 24.4%
- Net Profit Margin: 22.7%
Net Cash Provided by Operating Activities: $3.052 billion, with Free Cash Flow at $2.665 billion.
- Total Assets: $52.74 billion, Total Liabilities: $28.07 billion, with a strong equity position at $24.67 billion, signifying financial health and liquidity.
Financial Highlights
### Financial Performance Highlights
1. Revenue and Earnings
- Total Revenue: $9.4 billion, up 11.15% YoY and 0.04% QoQ.
- Net Income: $2.13 billion, an 18.08% increase YoY; EPS at $1.88 reflects a 17.90% YoY increase.
2. Segment Performance
- Qualcomm CDMA Technologies (QCT): Generated $8.1 billion with a notable 34% QoQ growth in automotive revenues (specifically to $811 million).
- Qualcomm Technology Licensing (QTL): Reported revenues of $1.3 billion with an EBT margin of 70%.
3. Profitability Ratios
- Gross Profit Margin: 55.6%
- Operating Income Margin: 24.4%
- Net Profit Margin: 22.7%
4. Cash Flow and Balance Sheet
- Net Cash Provided by Operating Activities: $3.052 billion, with Free Cash Flow at $2.665 billion.
- Total Assets: $52.74 billion, Total Liabilities: $28.07 billion, with a strong equity position at $24.67 billion, signifying financial health and liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.39B
11.15%
0.04%
Gross Profit
5.22B
12.02%
-1.21%
Operating Income
2.30B
25.95%
-1.88%
Net Income
2.13B
18.08%
-8.47%
EPS
1.91
17.90%
-8.17%
Key Financial Ratios
currentRatio
2.39
grossProfitMargin
55.6%
operatingProfitMargin
24.4%
netProfitMargin
22.7%
returnOnAssets
4.04%
returnOnEquity
8.63%
debtEquityRatio
0.59
operatingCashFlowPerShare
$2.73
freeCashFlowPerShare
$2.39
dividendPayoutRatio
44.6%
priceToBookRatio
9.09
priceEarningsRatio
26.32
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Key Insights from Management
Automotive Sector Growth: "In automotive, we secured more than 10 new design wins with global automakers during the quarter. Our Snapdragon Digital Chassis continues to scale and is now a key asset for the automotive industry." - Cristiano Amon, CEO.
AI Expansion in Mobile and Compute: "We are witnessing growth in AI features across smartphones, indicating a future shift towards AI-centric devices. Our architecture is uniquely positioned to utilize sensor data for multiple applications simultaneously." - Cristiano Amon, CEO.
Sales Momentum: "Sales for Copilot+ PCs are exceeding our expectations, with several models sold out at retailers reflecting strong demand across 20 countries." - Akash Palkhiwala, CFO.
"The automotive sector is becoming a major contributor to our revenue, with significant wins reflecting our diversification strategy." - Cristiano Amon.
— Cristiano Amon
"Our strategy for diversifying beyond handsets has gained momentum and we expect it to continue as we launch new and innovative products." - Akash Palkhiwala.
— Akash Palkhiwala
Forward Guidance
Management forecasts Q4 revenue between $9.5 billion to $10.3 billion with non-GAAP EPS projected between $2.45 and $2.65. They anticipate stable performance in QLT driven by normal seasonality, while QCT is projected to maintain strong revenues particularly in IoT and automotive sectors. The company is also gearing for increased sales momentum following the holiday season, underlined by new flagship releases.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
QCOM Focus
55.56%
24.40%
8.63%
26.32%
MRVL
23.00%
-46.40%
-5.06%
-27.13%
MU
26.90%
10.10%
0.75%
105.27%
AMD
50.10%
10.60%
1.35%
86.33%
INTC
15.00%
-68.20%
-16.70%
-1.54%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Based on the current metrics, QUALCOMM presents a dynamic growth trajectory with a positive revenue outlook. Investors should remain optimistic given the company's robust positioning in high-growth industries such as automotive and computing, coupled with strong management guidance and a healthy balance sheet. Its innovative endeavors toward AI integration can potentially yield significant dividend returns. Monitoring product launches and regulatory decisions will be crucial for understanding upcoming momentum in earnings.
Key Investment Factors
Growth Potential
QUALCOMM is well-positioned to capture growth from solid demand in automotive and IoT sectors, leveraging their advanced chip technologies and solidifying partnerships with leading OEMs. Faces less dependency on mobile handsets with newer revenue generators in play.
Profitability Risk
Potential revenue headwinds due to geopolitical factors, particularly concerning Huawei, as export licenses remain under scrutiny. Market saturation in smartphones poses risks to growth amid fluctuating global demand.
Financial Position
A strong balance sheet marked by substantial cash reserves of $7.77 billion, low debt-to-equity ratio of 0.59 indicates financial stability. Ability to sustain dividend policies and stock buyback programs indicates management’s confidence.
SWOT Analysis
Strengths
Strong diverse product portfolio heavily invested in R&D
Leadership in 5G and AI integration across platforms
Solid financial performance with increasing earnings and cash flow
Weaknesses
Dependence on smartphone market can pose future risks
Legal and regulatory challenges impacting licensing revenues
Opportunities
Growing automotive and IoT markets presents untapped potential
Continued expansion into AI-driven technologies boosts customer demand
Collaboration with leading tech firms creates additional avenues for growth
Threats
Intense competition from rivals in the semiconductor space
Geopolitical tensions affecting trade policies, particularly with China