Qualcomm Surpasses Q3 Earnings Estimates, Misses on Revenues

Qualcomm Incorporated QCOM reported relatively robust third-quarter fiscal 2025 results, with adjusted earnings exceeding the Zacks Consensus Estimate, driven by healthy demand trends in IoT and automotive businesses. However, revenues missed the consensus estimate despite improving year over year, led by the strength of the business model, diversification initiatives and the ability to respond proactively to the evolving market scenario.

Net Income

On a GAAP basis, net income in the June quarter improved to $2.67 billion or $2.43 per share from $2.13 billion or $1.88 per share in the prior-year quarter. The increase was primarily attributable to top-line growth. 

Quarterly non-GAAP net income came in at $3.04 billion or $2.77 per share compared with $2.65 billion or $2.33 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 7 cents.

Revenues

On a GAAP basis, total revenues in the fiscal third quarter were $10.36 billion, up from $9.39 billion in the year-ago quarter. The quarterly revenues missed the consensus mark of $10.42 billion. Qualcomm registered record automotive revenues owing to solid momentum in the Snapdragon Digital Chassis platform. Strength within the handset and industrial Internet of Things (IoT) businesses also buoyed the top line.

Segment Results

Quarterly revenues from Qualcomm CDMA Technologies (QCT) were $8.99 billion, up from $8.07 billion a year ago, as strength in the automotive platform, higher demand in handsets and Snapdragon AR1 chipset within the IoT business aided the top-line growth. The company witnessed solid market traction in the EDGE networking business that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets. 

Automotive revenues rose 21% to a record high of $984 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform, with automakers deploying high-performance, low-power computing and connectivity chips to bring next-generation experience to consumers. Handset revenues jumped 7% to $6.33 billion, led by healthy traction in premium Android handsets enabled by the Snapdragon 8 Elite platform. IoT revenues were up 24% to $1.68 billion on solid demand for the Snapdragon AR1 chipset for the emerging AI smart glasses category. EBT margin for the QCT segment rose to 30% from 27%.

Qualcomm Technology Licensing (QTL) revenues totaled $1.32 billion, up 4% year over year, as it remained the industry's most extensive licensing program of cellular essential patents. EBT margin improved to 71% from 70%.

Cash Flow & Liquidity

Qualcomm generated $10.02 billion of net cash from operating activities in the first nine months of fiscal 2025 compared with $9.56 billion a year ago. As of June 29, 2025, the company had $5.45 billion in cash and cash equivalents and $14.79 billion of long-term debt. The company repurchased 19 million shares during the quarter for $2.8 billion.

Guidance

For the fourth quarter of fiscal 2025, Qualcomm expects GAAP revenues of $10.3-$11.1 billion due to solid demand and portfolio strength. Non-GAAP earnings are projected to be $2.75-$2.95 per share, while GAAP earnings are likely to be $2.23-$2.43 per share. Revenues from QTL are expected to be between $1.25 billion and $1.45 billion. For QCT, the company anticipates revenues between $9 billion and $9.6 billion, with 5% sequential growth in handset revenues and relatively flat IoT and automotive revenues sequentially.

Zacks Rank

Qualcomm currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release second-quarter 2025 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at 65 cents per share, suggesting a growth of 25% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 14.8%. Arista delivered an average earnings surprise of 11.8% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at $1.55 per share, indicating a 1.9% decline from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 8%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.

Pinterest, Inc. PINS is set to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 17.2% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 33.3%. Pinterest delivered an average earnings surprise of 0.5% in the last four reported quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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