Qualcomm : FY 2023 3rd Quarter Earnings Release

FOR IMMEDIATE RELEASE

Qualcomm Contact: Mauricio Lopez-Hodoyan Vice President, Investor Relations

Phone: [phone] | e-mail: [e-mail]

Qualcomm Announces Third Quarter Fiscal 2023 Results

GAAP Revenues: $8.5 billion

GAAP EPS: $1.60, Non-GAAP EPS: $1.87

-EPS Exceeded Midpoint of Guidance Range-

-QCT Automotive: 11 Straight Quarters of Year-Over-Year Double Digit Percentage Growth in Revenues-

SAN DIEGO - August 2, 2023 - Qualcomm Incorporated (NASDAQ: QCOM) today announced results for its fiscal third quarter ended June 25, 2023.

"We are pleased with our technology leadership, product roadmap and design-win execution, which position us well for growth and diversification in the long term," said Cristiano Amon, President and CEO of Qualcomm Incorporated. "As AI use cases proliferate to the edge, on-device AI has the potential to drive an inflection point across all our products. Qualcomm remains best positioned to lead this transition given the unmatched accelerated computing performance with the power efficiency of our platforms."

Third Quarter Results1, 2

			GAAP					Non-GAAP
(in millions, except per share data	Q3 Fiscal		Q3 Fiscal		Change		Q3 Fiscal		Q3 Fiscal	Change
and percentages)	2023		2022			2023		2022
Revenues	$8,451	$10,936	(23%)	$8,442	$10,928		(23%)
Earnings before taxes (EBT)	$1,757	$4,239	(59%)	$2,430	$3,894		(38%)
Net income	$1,803	$3,730	(52%)	$2,105	$3,356		(37%)
Diluted earnings per share (EPS)	$1.60	$3.29	(51%)	$1.87	$2.96		(37%)

1. Discussion regarding our use of Non-GAAP financial measures and reconciliations between GAAP and Non-GAAP results are included at the end of this news release in the sections labeled "Note Regarding Use of Non-GAAP Financial Measures" and "Reconciliations of GAAP Results to Non-GAAP Results."
2. Third quarter fiscal 2022 GAAP results included a $1.1 billion benefit, or $0.94 per share, resulting from the reversal of the accrued fine imposed by the European Commission in fiscal 2018 and the associated accrued interest.

Segment Results

			QCT						QTL
(in millions, except percentages)	Q3 Fiscal		Q3 Fiscal		Change		Q3 Fiscal		Q3 Fiscal		Change
2023		2022			2023		2022
Revenues	$7,174	$9,378	(24%)	$1,230	$1,519	(19%)
EBT	$1,744	$2,996	(42%)	$811	$1,080	(25%)
EBT as % of revenues	24%	32%		-8 points	66%	71%		-5 points

Qualcomm Announces Third Quarter Fiscal 2023 Results					Page 2 of 8
QCT Revenue Streams1, 2
(in millions, except percentages)	Q3 Fiscal		Q3 Fiscal		Change
2023		2022
Handsets	$5,255	$7,047	(25%)
Automotive	434	385	+13%
IoT	1,485		1,946		(24%)
Total QCT revenues	$7,174	$9,378	(24%)

1. We disaggregate QCT revenues based on the industries and applications in which our products are sold.
2. Beginning in the first quarter of fiscal 2023, QCT RFFE (radio frequency front-end) revenues, which were previously presented as a separate revenue stream, are now included within our Handsets, Automotive and internet of things (IoT) revenue streams, as applicable. Prior period information has been recast to reflect this change.

Return of Capital to Stockholders

During the third quarter of fiscal 2023, we returned $1.3 billion to stockholders, including $893 million, or $0.80 per share, of cash dividends paid and $400 million through repurchases of 4 million shares of common stock.

Business Outlook

The following statements are forward looking, and actual results may differ materially. The "Note Regarding Forward-Looking Statements" in this news release provides a description of certain risks that we face, and our most recent quarterly report on file with the Securities and Exchange Commission (SEC) provides a more complete description of our risks.

The midpoint of our fourth quarter fiscal 2023 guidance includes the continued impact of the macroeconomic headwinds, weaker global handset units and channel inventory drawdown.

The following table summarizes GAAP and Non-GAAP guidance based on the current outlook.

	Current Guidance1
	Q4 FY23 Estimates
Revenues	$8.1B - $8.9B
Supplemental Revenue Information
QCT revenues	$6.9B - $7.5B
QTL revenues	$1.15B - $1.35B
GAAP diluted EPS	$1.37 - $1.57
Less diluted EPS attributable to QSI	$-
Less diluted EPS attributable to share-based compensation	($0.45)
Less diluted EPS attributable to other items2	$0.02
Non-GAAP diluted EPS	$1.80 - $2.00

1. Our outlook does not include provisions for proposed tax law changes, future asset impairments, charges from additional restructuring actions or for pending legal matters, other than future legal amounts that are probable and estimable. Further, due to their nature, certain income and expense items, such as certain investments, derivative and foreign currency transaction gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our financial outlook to the extent they are reasonably certain. Our outlook includes the impact of any pending business combinations to the extent they are expected to close in the upcoming quarter. Actual results may differ materially from the outlook.
2. Our guidance for diluted EPS attributable to other items for the fourth quarter of fiscal 2023 is primarily related to the tax benefit resulting from the requirement to capitalize research and development (R&D) expenditures under U.S. Federal income tax law, partially offset by acquisition-related items and existing restructuring plan charges.

Qualcomm Announces Third Quarter Fiscal 2023 Results

Page 3 of 8

Conference Call

Qualcomm's third quarter fiscal 2023 earnings conference call will be broadcast live on August 2, 2023, beginning at 1:45 p.m. Pacific Time (PT) at http://investor.qualcomm.com/events.cfm. This conference call will include a discussion of "Non-GAAP financial measures" as defined in Regulation G. The most directly comparable GAAP financial measures and information reconciling these Non-GAAP financial measures to our financial results prepared in accordance with GAAP, as well as other financial and statistical information to be discussed on the conference call, will be posted at http://investor.qualcomm.com/immediately prior to the commencement of the call. An audio replay will be available at http://investor.qualcomm.com/events.cfmand via telephone following the live call for 30 days thereafter. To listen to the replay via telephone, U.S. callers may dial [phone] and international callers may dial [phone]. Callers should use reservation number 13739729.

About Qualcomm

Qualcomm is enabling a world where everyone and everything can be intelligently connected. Our one technology roadmap allows us to efficiently scale the technologies that launched the mobile revolution - including advanced connectivity, high-performance, low- power compute, on-device intelligence and more - to the next generation of connected smart devices across industries. Innovations from Qualcomm and our family of Snapdragon platforms will help enable cloud-edge convergence, transform industries, accelerate the digital economy, and revolutionize how we experience the world, for the greater good.

Qualcomm Incorporated includes our licensing business, QTL, and the vast majority of our patent portfolio. Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of our engineering and research and development functions and substantially all of our products and services businesses, including our QCT semiconductor business. Snapdragon and Qualcomm branded products are products of Qualcomm Technologies, Inc. and/or its subsidiaries. Qualcomm patented technologies are licensed by Qualcomm Incorporated.

Note Regarding Forward-Looking Statements

In addition to the historical information contained herein, this news release contains forward-looking statements that are inherently subject to risks and uncertainties, including but not limited to statements regarding: our technology leadership, product roadmap and design-win execution; our being well positioned for long term growth and diversification; our expectations regarding the proliferation of AI use cases and the transition to on-device AI, the potential benefits thereof for our business and products, and our being best positioned to lead such transition; our product performance; macroeconomic headwinds; our business outlook, including our outlook for global handset units and channel inventory drawdown; and our estimates and guidance related to revenues and earnings per share (EPS). Forward-looking statements are generally identified by words such as "estimates," "guidance," "expects," "anticipates," "intends," "plans," "believes," "seeks" and similar expressions. Actual results may differ materially from those referred to in the forward-looking statements due to a number of important factors, including but not limited to: our dependence on a small number of customers and licensees, and particularly from their sale of premium-tier devices; our customers vertically integrating; a significant portion of our business being concentrated in China, which is exacerbated by U.S./ China trade and national security tensions; our ability to extend our technologies and products into new and expanded product areas, and industries and applications beyond mobile handsets; our strategic acquisitions, transactions and investments, and our ability to consummate strategic acquisitions; our dependence on a limited number of third-party suppliers; risks associated with the operation and control of our manufacturing facilities; security breaches of our information technology systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information; our ability to attract and retain qualified employees, and recent changes to our hybrid work model; the continued and future success of our licensing programs, which requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring; efforts by some OEMs to avoid paying fair and reasonable royalties for the use of our intellectual property, and other attacks on our licensing business model; potential changes in our patent licensing practices, whether due to governmental investigations, legal challenges or otherwise; adverse rulings in governmental investigations or proceedings or other legal proceedings; our customers' and licensees' sales of products and services based on CDMA, OFDMA and other communications technologies, including 5G, and our customers' demand for our products based on these technologies; competition in an environment of rapid technological change, and our ability to adapt to such change and compete effectively; failures in our products or in the products of our customers or licensees, including those resulting from security vulnerabilities, defects or errors; difficulties in enforcing and protecting our intellectual property rights; claims by third parties that we infringe their intellectual property; our use of open source software; impacts of the COVID-19 pandemic, or any similar health crisis that may arise in the future, and government policies and other measures adopted in response thereto; the cyclical nature of the semiconductor industry, declines in global, regional or local economic conditions, or our stock price and earnings volatility; our ability to comply with laws, regulations, policies and standards; our indebtedness; and potential tax liabilities. These and other risks are set forth in our Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2023 filed with the SEC. Our reports filed with the SEC are available on our website at www.qualcomm.com. We undertake no obligation to update, or continue to provide information with respect to, any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

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Qualcomm Announces Third Quarter Fiscal 2023 Results					Page 4 of 8
QUALCOMM Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value amounts)
(Unaudited)
		June 25,		September 25,
		2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	6,087	$	2,773
Marketable securities		2,544			3,609
Accounts receivable, net		3,850			5,643
Inventories		6,628			6,341
Held for sale assets		317			733
Other current assets		1,050			1,625
Total current assets		20,476			20,724
Deferred tax assets		2,773			1,803
Property, plant and equipment, net		5,216			5,168
Goodwill		10,591			10,508
Other intangible assets, net		1,618			1,882
Held for sale assets		218			1,200
Other assets		8,110			7,729
Total assets	$	49,002		$	49,014
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	1,744	$	3,796
Payroll and other benefits related liabilities		1,546			1,486
Unearned revenues		249			369
Short-term debt		914			1,945
Held for sale liabilities		300			581
Other current liabilities		3,710			3,689
Total current liabilities		8,463			11,866
Unearned revenues		92			144
Income taxes payable		1,098			1,472
Long-term debt		14,530			13,537
Held for sale liabilities		36			119
Other liabilities		4,113			3,863
Total liabilities		28,332			31,001
Stockholders' equity:
Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding		-			-
Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,115 and 1,121		77			195
shares issued and outstanding, respectively
Retained earnings		20,163			17,840
Accumulated other comprehensive income (loss)		430			(22)
Total stockholders' equity		20,670			18,013
Total liabilities and stockholders' equity	$	49,002		$	49,014

Qualcomm Announces Third Quarter Fiscal 2023 Results											Page 5 of 8
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
	(Unaudited)
			Three Months Ended			Nine Months Ended
			June 25,		June 26,			June 25,			June 26,
			2023				2022			2023			2022
Revenues:
Equipment and services	$	7,108			$	9,266	$	22,737	$	27,365
Licensing			1,343				1,670			4,452			5,440
Total revenues			8,451				10,936			27,189			32,805
Costs and expenses:
Cost of revenues			3,792				4,816			11,989			13,767
Research and development			2,222				2,052			6,683			6,016
Selling, general and administrative			618				655			1,854			1,887
Other			(4)				(1,059)			285			(1,059)
Total costs and expenses			6,628				6,464			20,811			20,611
Operating income			1,823				4,472			6,378			12,194
Interest expense			(172)				(70)			(521)			(345)
Investment and other income (expense), net			106				(163)			166			(321)
Income from continuing operations before income taxes			1,757				4,239			6,023			11,528
Income tax expense			(22)				(509)			(313)			(1,465)
Income from continuing operations			1,735				3,730			5,710			10,063
Discontinued operations, net of income taxes			68				-			32			-
Net income	$	1,803			$	3,730	$	5,742	$	10,063
Basic earnings per share:
Continuing operations	$	1.56			$	3.32	$	5.11	$	8.96
Discontinued operations			0.06				-			0.03			-
Net income	$	1.62			$	3.32	$	5.14	$	8.96
Diluted earnings per share:
Continuing operations	$	1.54			$	3.29	$	5.07	$	8.84
Discontinued operations			0.06				-			0.03			-
Net income	$	1.60			$	3.29	$	5.10	$	8.84
Shares used in per share calculations:
Basic			1,115				1,122			1,117			1,124
Diluted			1,124				1,134			1,126			1,139