QUALCOMM INC/DE Q2 FY2025 earnings call

• Cristiano Amon highlighted Q2 non-GAAP revenues of $10.8 billion and non-GAAP earnings per share of $2.85. Strength in handsets, automotive, and IoT drove chipset revenues. The X85 5G platform was announced, supporting AI experiences. Progress in PC, XR, automotive, and industrial IoT was noted, including acquisitions like Edge Impulse and FocusAI. - Akash Palkhiwala discussed Q2 earnings exceeding guidance, Q3 guidance with revenues $9.9M-$10.7B and non-GAAP EPS $2.60-$2.80, capital returns to stockholders, and focus on execution priorities despite macro uncertainty.

In fiscal Q2, Qualcomm's non-GAAP revenues were $10.8 billion. The chipset business (QCT) generated revenues of $9.5 billion. Handset revenues within QCT grew 12% year-over-year to $6.9 billion, driven by increased premium tier Android shipments. IoT revenues in QCT were $1.6 billion, up 27% year-over-year, with significant growth in industrial. Automotive revenues in QCT were $959 million, reflecting 59% year-over-year growth due to increased content in new vehicle launches using Snapdragon digital chassis platforms. Licensing business (QTL) had revenues of $1.3 billion, flat year-over-year.

• For the third fiscal quarter, forecast revenues of $9.9 million to $10.7 billion and non-GAAP EPS of $2.60 to $2.80. QTL revenues expected to be flat YOY. QCT expected revenues $8.7 billion to $9.3 billion with EBT margin 28% to 30%. - Increasing capital return target to 100% of free cash flow in fiscal 2025.

• Uncertainty around the global trade landscape and its impact on demand across businesses. Dynamic nature of tariffs and their potential financial impact.

Q: Could you talk about assumptions in guidance, especially regarding tariffs and pull ins?

A: Cristiano Amon said guidance reflects current tariff impact assessment, no material direct pull ins seen, diversified supply chain positions well.

Q: What drove IoT segment upside?

A: Akash Palkhiwala said IoT growth due to transition from microcontrollers to microprocessors and AI, benefit from technology portfolio across consumer networking, industrial, PCXR.

Q: Thoughts on M&A pipeline and strategy?

A: Cristiano Amon said acquisitions align with investor day plan, building software platforms for industrial edge AI, continuing to augment with such acquisitions.

Q: Chipset gross margins down in Q2 and guidance up in Q3?

A: Akash Palkhiwala said it's due to mix across tiers and segments.

Q: Growth drivers in automotive and ADAS?

A: Cristiano Amon said drivers include mix improvement in digital cockpit and ADAS, pipeline with one third ADAS, five new ADAS designs in Q2.

Q: Handsets growth, China subsidies, and sustainability?

A: Akash Palkhiwala said China subsidies led to stronger premium tier mix, expanding from 21% to 30% of new devices sold.

Q: Competition in smartphones and AI in PC vs mobile?

A: Cristiano Amon said competitive landscape stable, two players in China market. AI in mobile has clear trends, PC AI at early stage but similar positive cycle expected.

Q: OpEx change with Apple business exit and free cash flow return?

A: Akash Palkhiwala said strategy to transition OpEx from handsets to new areas, free cash flow return due to strong cash flow and stock price opportunity while maintaining strategic flexibility.