Qualcomm fiscal Q3 results beat expectations, says 'very happy' with Apple relationship

Qualcomm responded to questions about the threat of Apple making its own modem chip to replace Qualcomm's modem by saying it is happy with the relationship it has with the company.

Mobile chip giant Qualcomm this afternoon reported Q4 revenue and profit that topped analysts' expectations, and an outlook for the current quarter that was higher as well. 

The report sent Qualcomm shares up 3% in late trading. 

CEO Cristiano Amon remarked that "in addition to leading the 5G transition," Qualcomm is "on pace to deliver $10 billion of annual revenues across RF front-end, IoT and Automotive as our business continues to diversify."

Added Amon, "Our solutions are fueling the connected intelligent edge that is enabling the cloud economy, and we are seeing unprecedented demand for our technologies as the pace of digital transformation accelerates."

Qualcomm reaffirmed its existing view for the cellular market outlook: "For calendar 2021, we are maintaining our forecast for high single-digit-growth for global 3G/4G/5G handsets, with an upward bias to 5G forecast of 450 to 550 million 5G handset shipments."

During the conference call with analysts Wednesday evening, Amon was asked about the risk of Apple displacing Qualcomm's modem chip with Apple's in-house chip. Said Amon, "We're very happy with a relationship with Apple. We're just on their first phone. We have other phones to go, and we're very happy with the way things are progressing."

Revenue in the three months ended in June rose 63%, year over year, to $7.99 billion, yielding a net profit of $1.92 a share, excluding some costs.

Analysts had been modeling $7.53 billion and $1.91 per share. 

The adjusted, non-GAAP revenue number excludes Qualcomm's QSI, or "Qualcomm Strategic Initiatives," segment, which the company plans to divest.

Within the results, sales from Qualcomm's chip business, "QCT," rose 70%, year over year, to $6.47 billion, while revenue from the licensing division, "QTL," rose by 43% to $1.5 billion. 

Qualcomm's sales into handsets rose 57% to $3.86 billion. The company attributed the rise to "the adoption of our 5G products in premium and high-tier devcies across all major OEMs."

Sales of radio frequency "front-end" chips more than doubled to $957 million. Sales into the automotive market and sales into the IoT market both rose by 83%, to $253 million and $1.4 billion, respectively, The IoT revenue was $100 million higher than Qualcomm had forecast. 

On the IoT front, Qualcomm said sales benefitted from "demand across consumer, edge networking and industrial platforms," including, on the consumer side, emerging products such as XR, meaning, "extended reality," including VR, and consumer wearables. In addition, the buildout of edge networking, including mobile broadband contributed, said Qualcomm, including "Continued momentum driven by the enterprise transformation of the home and the second wave of enterprise demand driven by return to the workplace" and "a rapid adoption of Wi-Fi 6 and increased demand for both 4G and 5G mobile broadband devices." Industrial uses of IoT, via 5G, is just getting underway, the company said. 

For the current quarter, the company sees revenue of $8.4 billion to $9.2 billion, and EPS in a range of $2.15 to $2.53. That compares to consensus for $8.46 billion and $2.03 profit per share.

That includes $7 billion to $7.5 billion of QCT chip sales.