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QUALCOMM INC/DE (QCOM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 delivered double-digit top- and bottom-line growth with GAAP revenue of $10.98B (+17% YoY) and non-GAAP EPS of $2.85 (+17% YoY); segment execution was broad-based with QCT revenue +18% and EBT +25% YoY, and combined Auto+IoT revenue +38% YoY .
  • Results modestly exceeded S&P Global consensus: revenue beat by ~$0.32B and EPS by ~$0.03, while QCT landed at the high end of segment guidance and QTL was roughly midpoint; non-GAAP revenue excludes ~$143M licensing settlement not allocated to segments . S&P Global estimates marked with an asterisk; Values retrieved from S&P Global.
  • Q3 FY25 guidance is essentially in line with Street midpoints (revenue $9.9–$10.7B; non‑GAAP EPS $2.60–$2.80), with QCT EBIT margin guided to 28–30% and QTL EBT margin to 67–71%; management also targets ~$2.25B non‑GAAP OpEx and lifted FY25 capital returns to 100% of FCF .
  • Stock catalyst: continued diversification (Auto +59% YoY; IoT +27% YoY), China premium-tier mix support, and PC traction, offset by tariff/macro uncertainty; Apple modem share expected to step down to ~70% in fall 2025, but management reiterated confidence in long-term non-handset targets .

What Went Well and What Went Wrong

  • What Went Well

    • Broad beat with balanced growth: QCT revenue $9.47B (+18% YoY) and EBT +25% YoY; Auto +59% YoY to $959M and IoT +27% YoY to $1.58B led diversification; handsets +12% YoY as Android premium mix improved .
    • Strategic momentum in AI/edge: CEO highlighted rapid progress of smaller on‑device models and Snapdragon x85 5G Advanced modem “designed for mobile AI,” with strong carrier/OEM validation; PC attach gaining, with >85 designs in flight and ~9% retail share for >$600 Windows in US/Top-5 EU in Mar‑Q .
    • Capital returns and margin discipline: returned $2.7B (incl. $1.7B buybacks, $0.85 dividend); guidance implies QCT EBIT margin 28–30% and QTL 67–71%; board raised dividend to $0.89 post‑Mar 27 and FY25 capital returns to 100% of FCF .

  • What Went Wrong

    • Mix/tier headwinds nibbling at chipset margins: management cited small mix effects (lower tiers) as the main reason for slight q/q pressure in QCT gross margin metrics despite premium-tier handset strength .
    • QTL softness in emerging regions: licensing revenue was flat YoY and slightly below guidance midpoint due to lower handset units in emerging markets .
    • Tariff/macro overhang: no material direct impact yet, but guidance embeds minor demand changes and acknowledges dynamic uncertainty (indirect effects difficult to predict) .

Financial Results

MetricQ2 FY2024Q1 FY2025Q2 FY2025
Revenue (GAAP, $B)$9.389 $11.669 $10.979
Revenue (non‑GAAP, $B)$9.386 $11.669 $10.836 (excl. $143M settlement)
GAAP EPS ($)$2.06 $2.83 $2.52
Non‑GAAP EPS ($)$2.44 $3.41 $2.85
EBT Margin (GAAP, %)27% 31% 28%
EBT Margin (non‑GAAP, %)34% 38% 34%

Segment performance

SegmentQ2 FY2024Q1 FY2025Q2 FY2025
QCT Revenue ($B)$8.026 $10.084 $9.469
QCT EBT ($B)$2.288 $3.246 $2.857
QCT EBT Margin (%)29% 32% 30%
QTL Revenue ($B)$1.318 $1.535 $1.319
QTL EBT ($B)$0.933 $1.158 $0.929
QTL EBT Margin (%)71% 75% 70%

QCT revenue streams

QCT Revenue StreamQ2 FY2024Q1 FY2025Q2 FY2025
Handsets ($B)$6.180 $7.574 $6.929
Automotive ($B)$0.603 $0.961 $0.959
IoT ($B)$1.243 $1.549 $1.581
Total QCT ($B)$8.026 $10.084 $9.469

Select KPIs and cash returns

KPIQ4 FY2024Q1 FY2025Q2 FY2025
Capital returned ($B)$2.249 $2.7 $2.7
Share repurchases (M shares)8 11 11
Dividend per share ($)$0.85 $0.85 $0.85; increased to $0.89 effective after Mar 27, 2025
Non‑GAAP OpEx (guide)——~$2.25B (Q3 guide)
PC: >$600 Windows retail share——~9% in Mar‑Q (US/Top-5 EU)
Snapdragon X designs (cumulative)——>85 now; targeting >100 by 2026
Auto: new design wins in Q——30 total; incl. 5 ADAS programs

Estimate comparison (S&P Global)

MetricQ1 FY2025 ConsensusQ1 FY2025 ActualQ2 FY2025 ConsensusQ2 FY2025 Actual
Revenue ($B)$10.94*$11.669 $10.66*$10.979
EPS (non‑GAAP) ($)$2.99*$3.41 $2.82*$2.85
S&P Global disclaimer: Asterisked values are from S&P Global consensus and are provided without document citations. Values retrieved from S&P Global.

Notes: Q2 non‑GAAP revenue excludes ~$143M licensing settlement not allocated to segments; “other items” detail provided in reconciliations .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueQ2 FY25Non‑GAAP: $10.2B–$11.0B Actual: Non‑GAAP $10.836B In range (near high end)
QCT RevenueQ2 FY25$8.9B–$9.5B Actual: $9.469B At high end
QTL RevenueQ2 FY25$1.25B–$1.45B Actual: $1.319B Midpoint
GAAP EPSQ2 FY25$2.38–$2.58 Actual: $2.52 In range
Non‑GAAP EPSQ2 FY25$2.70–$2.90 Actual: $2.85 Near high end
Total RevenueQ3 FY25—$9.9B–$10.7B New
QCT RevenueQ3 FY25—$8.7B–$9.3B New
QTL RevenueQ3 FY25—$1.15B–$1.35B New
GAAP EPSQ3 FY25—$2.14–$2.34 New
Non‑GAAP EPSQ3 FY25—$2.60–$2.80 New
QCT EBIT MarginQ3 FY25—28%–30% New
QTL EBT MarginQ3 FY25—67%–71% New
Non‑GAAP OpExQ3 FY25—~ $2.25B New
Dividend per shareFuture$0.85 prior$0.89 (effective for dividends after Mar 27, 2025) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024, Q1 FY2025)Current Period (Q2 FY2025)Trend
AI/Technology roadmapStrong product cadence, diversification; QCT/QTL margins expanding; Investor Day planned . Record Q1 revs, non‑handset target reiterated .Rapid progress in on‑device AI (smaller multimodal models), Snapdragon x85 “designed for mobile AI”; on-device PC AI ramp with >85 designs .Positive momentum; broadening use cases
Supply chain/tariffs/macroMacro manageable; outlook embedded in guidance .No material direct tariff impact; minor demand changes embedded; dynamic environment monitored .Watchful; risk managed via diversified supply chain
Handset/product performanceQCT handsets up; premium-tier mix helping . Q1: record QCT handsets .Handsets +12% YoY; China subsidies aided premium tier; premium >$400 rising from 21% (2019) to ~30% (2024) .Premium mix tailwind persists
Automotive5th straight quarterly record in Q4 FY24 . Q1: 6th record, $961M .$959M, +59% YoY; 30 new designs incl. 5 ADAS; cockpit+ADAS “Flex” traction .Strong pipeline; ADAS ramp approaching
IoT/IndustrialXR/IoT mixed in FY24, but recovery underway . Q1: IoT +36% YoY .IoT +27% YoY; strongest in Industrial; Edge Impulse and FocusAI acquisitions bolster software-led edge AI .Improving; software/platform leverage
Regional trends (China)Exposure, but premium tier growing .China subsidies boosted premium-tier Android; no slowdown in China design traction across segments .Supportive mix despite macro
Regulatory/legalEC fine accounted in “other items” (immaterial per-quarter) .$1M EC fine interest in other items; licensing settlement excluded from non‑GAAP revenue .Largely noise in quarter
R&D/OpEx disciplineOperating cash flow record; framework consistent .Non‑GAAP OpEx guided ~ $2.25B; capital return to 100% FY25 FCF .Focused investment, shareholder-friendly

Management Commentary

  • “We are pleased to report another quarter of strong results… Our top priorities remain executing our diversification strategy and continuing to invest in areas that drive long-term value.” — Cristiano Amon, CEO .
  • “We delivered non-GAAP revenues of $10.8 billion and non-GAAP EPS of $2.85… Automotive and IoT revenues increased 59% and 27% year-over-year, respectively.” — Cristiano Amon .
  • “For the third fiscal quarter, we are forecasting revenues of $9.9 billion to $10.7 billion and non-GAAP EPS of $2.60 to $2.80… We estimate non-GAAP operating expenses to be approximately $2.25 billion.” — Akash Palkhiwala, CFO/COO .
  • “We are increasing our capital return target to 100% of free cash flow in fiscal ’25.” — Akash Palkhiwala .

Q&A Highlights

  • Tariffs/macro: No material direct impact; guidance includes minor demand effects; indirect impacts hard to predict; diversified global supply chain helps manage risk .
  • IoT upside drivers: Strength across consumer, networking and especially Industrial; secular transition from MCUs to MPUs + AI at the edge benefiting Qualcomm portfolio .
  • Apple share trajectory: Expect ~70% share in fall‑2025 launch; normal seasonality across Android/Auto/IoT into Q4 (Sep‑Q) .
  • China dynamics: Subsidies support premium-tier growth; no signs of design traction slowdown across Chinese OEMs in smartphones, PC, auto, XR, industrial .
  • Margins: Slight q/q pressure from mix across tiers/segments; otherwise trends consistent .
  • Auto outlook: Mix/Content expansion (cockpit, compute) plus ADAS pipeline (5 new programs) underpin multi‑year growth confidence .
  • Huawei royalties: No updates on negotiations .
  • Capital returns: Upped to 100% FCF given strong cash flow and buyback opportunity while retaining M&A flexibility .

Estimates Context

  • Q2 FY25 beat S&P Global consensus: Revenue $10.98B vs $10.66B*; non‑GAAP EPS $2.85 vs $2.82* (modest beats). Q1 FY25 also delivered notable beats (Rev $11.67B vs $10.94B*, EPS $3.41 vs $2.99*) . S&P Global estimates marked with an asterisk; Values retrieved from S&P Global.
  • Q3 FY25 guidance vs S&P Global: Revenue $9.9–$10.7B (midpoint ~$10.3B) vs $10.35B*; non‑GAAP EPS $2.60–$2.80 (midpoint $2.70) vs $2.71* — essentially in line, suggesting limited near-term estimate drift barring macro changes . S&P Global estimates marked with an asterisk; Values retrieved from S&P Global.
  • Mix commentary (Android premium, Industrial IoT, Auto content) implies Street may need to adjust QCT sub-segment mix assumptions (slightly more IoT/Auto) and modestly lower QTL unit assumptions in emerging markets .

Key Takeaways for Investors

  • Diversification is working: Auto (+59% YoY) and IoT (+27% YoY) are growing faster than handsets, with robust design-win cadence (30 in Auto, incl. 5 ADAS) and industrial-led IoT strength — supporting a re‑rating toward non‑handset narratives .
  • AI on-device is a real, durable driver: Snapdragon x85 and rapid progress of smaller models underpin ASP/content and competitive differentiation across smartphones and PCs (>85 designs; ~9% retail share in >$600 Windows) .
  • Near-term setup is balanced: Q3 guide aligns with Street; watch tariffs/macro but risk appears contained with no material direct impacts to date .
  • Handset premium mix tailwinds continue, aided by China subsidies; however, expect Apple share normalization (~70% in fall-2025) — investors should focus on Android share and content expansion to offset .
  • Margin watch: Mix across tiers/segments modestly pressured chipset margins; monitor IoT/Auto scale for operating leverage and recurring software attach (Edge Impulse/FocusAI) .
  • Capital return accelerant: FY25 commitment to return 100% of FCF plus dividend raised to $0.89 supports downside protection; buybacks can smooth volatility .
  • Estimate implications: Modest raises likely in Auto/Industrial IoT; overall FY25–FY26 consensus may stay anchored near current midpoints until macro clarity improves; upside lever remains on-device AI adoption curves .

Citations

  • Q2 FY25 8‑K/Press Release: revenues, EPS, segment, guidance, reconciliations .
  • Q2 FY25 Call: prepared and Q&A themes, margins, tariffs, Auto/IoT/PC detail, Apple share, capital returns .
  • Q1 FY25 8‑K: prior-quarter comps and guidance-for-Q2 .
  • Q4 FY24 8‑K: two-quarters-back comps and auto records .
  • Dividend increase PR: $0.89 dividend effective after Mar 27, 2025 .
  • S&P Global consensus: asterisked values in estimates tables are from S&P Global; Values retrieved from S&P Global.