Qualcomm delivers mixed Q1 in spite of strong growth in chip sales

Chip sales for handsets, RF front-end, automotive and IoT all showed strong growth in Q1, but overall revenue still fell slightly below expectations.

Qualcomm on Wednesday delivered mixed first quarter financial results, with earnings slightly above market expectations and revenue slightly below. Though revenue from Qualcomm's chip business grew substantially, and its Q2 outlook is above market expectations, shares were down in after-hours trading. 

Qualcomm's non-GAAP diluted earnings per share in Q1 came to $2.17. Revenue was $8.235 billion, up 62 percent year-over-year. 

Wall Street was expecting earnings of $2.10 on revenue of $8.27 billion.

"We delivered an exceptional quarter, more than doubling earnings year-over-year due to strong 5G demand in handsets and growth in our RF front-end, automotive and IoT adjacencies, which drove record earnings in our chip business," CEO Steve Mollenkopf said in a statement. "We remain well positioned as the 5G ramp continues and we extend our core technology roadmap to adjacent industries."

First quarter revenues from the Qualcomm Technology Licensing (QTL) segment, Qualcomm's licensing division, came to $1.66 billion, an 18 percent increase year-over-year. QTL accounts for a significant portion of Qualcomm's earnings.

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QCT revenues

The company's other business segment, QCT (Qualcomm CDA Technologies), accounts for most of its revenue. QCT revenues in Q1 were $6.533 billion, an 81 percent increase year-over-year. Within QCT, revenue from handsets grew 79 percent to $4.216 billion. RF front-end revenue grew 157 percent to reach $1.06 billion. IoT revenue grew 48 percent to hit $1.044 billion. Lastly, automotive revenue grew 44 percent to $212 million. 

Qualcomm also said that in Q1 it returned $1.2 billion to stockholders, including $739 million, or 65 cents per share, of cash dividends paid and $444 million through repurchases of 3 million shares of common stock.

For Q2, Qualcomm expects revenues between $7.2 billion and 8 billion, with QCT accounting for $6 billion to $6.5 billion. Wall Street is expecting total revenue of $7.1 billion in Q2.