Qualcomm 2025 Q2 Earnings Surpasses Expectations with 20.9% Net Income Growth

Qualcomm, with a market capitalization ranking of 68th, released its fiscal 2025 Q2 earnings on April 30, 2025. The results exceeded expectations, with total revenue reaching $10.98 billion, a 16.9% increase from the previous year. Despite this, guidance for the next quarter was slightly below analyst estimates. Qualcomm forecasts revenues between $9.9 billion and $10.7 billion, with non-GAAP EPS projected between $2.60 and $2.80. The company anticipates its licensing revenues to remain flat year-over-year, reflecting seasonal trends in handset units.

Revenue

In Q2 of fiscal 2025, Qualcomm's total revenue saw a 16.9% increase, reaching $10.98 billion, compared to $9.39 billion in the same quarter of the previous year. The QCT segment contributed $9.47 billion, while QTL added $1.32 billion. Additionally, reconciling items accounted for $191 million, culminating in the total revenue figure.

Earnings/Net Income

Qualcomm's earnings per share (EPS) rose by 22.6% to $2.55 in 2025 Q2, compared to $2.08 in 2024 Q2. The company's net income strengthened by 20.9%, reaching $2.81 billion, up from $2.33 billion in the previous year. This positive performance indicates a robust EPS growth driven by strategic initiatives.

Price Action

The stock price of Qualcomm increased by 2.25% during the latest trading day and rose 5.70% over the past week, though it declined 2.79% month-to-date.

Post-Earnings Price Action Review

Following the earnings report, Qualcomm's stock price did not immediately benefit from the revenue and EPS beats, showcasing a 5.6% decline in after-hours trading. Despite surpassing revenue expectations of $10.55 billion with an actual $10.84 billion, the stock did not see a positive reaction. This indicates that while revenue growth is vital, other factors such as market conditions and guidance can significantly influence stock movements. The EPS of $2.85 exceeded forecasts by 1.8%, leading to a minimal increase in stock price. However, the broader market environment and forward guidance likely muted this impact. Historically, EPS changes have been significant drivers of stock price fluctuations, but in this instance, external factors played a more crucial role in determining stock performance post-earnings.

CEO Commentary

Cristiano Amon, President and CEO, highlighted that in fiscal Q2, Qualcomm achieved non-GAAP revenues of $10.8 billion and earnings per share of $2.85, driven by a 59% year-over-year growth in automotive and a 27% increase in IoT. He emphasized the expansion of demand for their technology as AI proliferates across industries, underscoring the company's commitment to driving the next wave of AI smartphones. Amon expressed confidence in Qualcomm's technology leadership amid macroeconomic challenges, stating, "we remain focused on our execution priorities" and reaffirming the company's strategic vision for growth through innovation and partnerships.

Guidance

For the third fiscal quarter, Qualcomm forecasts revenues between $9.9 billion and $10.7 billion, with non-GAAP EPS projected between $2.60 and $2.80. The company anticipates licensing revenues to be approximately flat year-over-year, reflecting seasonality in handset units, with estimates of $1.15 billion to $1.35 billion. QCT revenues are expected to range from $8.7 billion to $9.3 billion, with a year-over-year growth of around 12%, driven by strength in handsets, IoT, and automotive. Non-GAAP operating expenses are estimated at approximately $2.25 billion.

Additional News

In recent developments, Qualcomm announced a $22 billion target for non-handset revenue by 2026. This ambitious goal underscores the company's strategic pivot towards diversifying its revenue streams beyond its core smartphone chip business. Qualcomm's automotive and IoT segments, which have shown significant growth, are expected to be key contributors to this target. Additionally, the company has been focusing on expanding its partnerships and collaborations in the AI and automotive sectors. Qualcomm's strategic moves are aimed at reducing dependence on handset revenues, enhancing its position in emerging technology markets, and ensuring long-term growth sustainability. These initiatives reflect Qualcomm's commitment to innovation and adaptation in a rapidly evolving tech landscape.