Qualcomm (QCOM) reported strong Q4 FY24 results, exceeding both EPS and revenue expectations. The company delivered an adjusted EPS of $2.69, surpassing the consensus estimate of $2.56 and marking a significant improvement from $2.02 in the prior year. Revenue grew by 18% year-over-year to $10.24 billion, beating estimates of $9.91 billion. This growth reflects strength across Qualcomm’s core segments, driven by robust demand in mobile and emerging markets like automotive and IoT.
Shares reacted positively to the results and outlook as the stock jumped above the 200-dma ($175) to rally $178, lust shy of the October high of $179. It did slide nback below that level during its conference call.
A key highlight of Qualcomm's results was its QCT (Qualcomm CDMA Technologies) segment, which generated $8.68 billion in revenue, up 18% year-over-year and slightly above the $8.42 billion estimate. Within QCT, the handset segment brought in $6.1 billion, rising 12% year-over-year, showing resilience amid a challenging smartphone market. Additionally, Qualcomm’s IoT revenue reached $1.68 billion, growing 22% year-over-year, while automotive revenue surged 68% to $899 million, surpassing expectations of $816.2 million and underscoring the company’s expansion into high-growth areas beyond mobile.
Qualcomm’s licensing segment, QTL (Qualcomm Technology Licensing), also posted strong performance with $1.52 billion in revenue, a 21% year-over-year increase and above the $1.44 billion consensus. The QTL segment’s EBT margin came in at 74%, at the high end of its guidance range, reflecting the profitability of its licensing operations. This success highlights the value of Qualcomm’s intellectual property portfolio as it continues to monetize its technology through licensing agreements with major industry players.
Looking ahead, Qualcomm provided solid guidance for Q1 FY25, with revenue expected to range between $10.5 billion and $11.3 billion, in line with analyst estimates of $10.54 billion. The company guided for adjusted EPS between $2.85 and $3.05, above the consensus of $2.81. This outlook reflects Qualcomm’s confidence in its growth trajectory, supported by continued strength in the QCT and QTL segments, along with rising demand in IoT and automotive markets.
In addition to its earnings performance, Qualcomm announced a new $15 billion share repurchase program, underscoring its commitment to returning value to shareholders. During Q4, Qualcomm returned $2.2 billion to shareholders, which included $1.3 billion in share buybacks and $900 million in dividends. The expanded repurchase authorization is likely to provide support to the stock, demonstrating management's confidence in the company's long-term prospects and strong cash flow generation.
Qualcomm's strategic investments in AI, 5G, and high-performance computing continue to position it well against competitors, even as macroeconomic conditions create headwinds for the tech industry. Management cited strong demand for Qualcomm’s Compute Subsystems (CSS), driven by the growing need for advanced processing power to support AI applications. This investment is expected to further enhance Qualcomm’s competitive advantage, particularly as it expands into new areas of growth within automotive and IoT.
Overall, Qualcomm’s Q4 results and optimistic Q1 guidance reflect its robust business model and diversified revenue streams. While maintaining a strong foothold in mobile, Qualcomm’s expansion into automotive and IoT highlights its strategy of capitalizing on high-growth markets. The company’s continued investments, combined with its shareholder return initiatives, underscore its commitment to growth and value creation, setting a positive tone as it heads into FY25.