Qualcomm published better-than-expected first quarter financial results on Wednesday, declaring that the company has started to realize the benefits of the move to 5G.
Qualcomm's Q1 non-GAAP earnings per share came to 99 cents, a decrease of 18 percent year-over-year. Revenue for the quarter was $5.05 billion, an increase of 5 percent year-over-year.
Analysts were looking for earnings of 85 cents per share on revenue of $4.83 billion.
"Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G," CEO Steve Mollenkopf said in a statement.
First quarter revenues from the Qualcomm Technology Licensing (QTL) segment, Qualcomm's licensing division, came to $1.4 billion, a 38 percent increase year-over-year. QTL accounts for a significant portion of Qualcomm's earnings.
The company's other business segment, QCT (Qualcomm CDA Technologies), accounts for most of its revenue. QCT revenues in Q1 were $3.62 billion, a decrease of 3 percent year-over-year. Within QCT, MSM ((mobile station modem) chip shipments in Q1 reached 155 million, a decrease of 17 percent year-over-year.
Qualcomm's 5G strategy, Mollenkopf explained on a Wednesday conference call, is "to grow our addressable dollar content per device with higher-performing core chipsets and new RF front-end content."
Virtually all of Qualcomm's 5G Snapdragon design wins are using the company's RF front-end solutions for 5G sub-6 and/or millimeter wave.
"As we continue to execute on our RF front-end strategy, we are pleased to see our RF design win pipeline contributed to the strength of our quarterly results and our outlook," Mollenkopf said. "We are in a strong position with leading technology and intellectual property and the best products in the company's history."
Qualcomm recently introduced its flagship Snapdragon 865 mobile platform, which it expects will power many premium tier Android smartphones this year. They also introduced the Snapdragon 765 and 765 Gaming Mobile platforms with an integrated 5G modem.
There are currently over 345 operators in nearly 120 countries investing in 5G, Mollenkopf noted on the call. That includes 45 operators in over 20 countries that have launched commercial 5G services, spanning both the sub-6 and millimeter wave spectrum. Looking forward, Qualcomm continues to expect millimeter wave to be deployed in all regions. Additionally, more than 45 OEMs have launched or announced commercial 5G devices, many of which are using Qualcomm Snapdragon 5G platforms.
In a statement provided to ZDNet, tech analyst Patrick Moorhead attributed Qualcomm's solid Q1 performance to growth in the smartphone market in terms of units and the growing success of Qualcomm's RF business.
"5G looks to be paying dividends financially. It also helps that most of Qualcomm's customers are actually paying for licenses," Moorhead said. "The company's 5G outlook still looks quite positive, too, sticking with 5G handset forecast between 175M and 225M units in 2020. I believe Qualcomm is positioned for big 5G volume well given its mainstream and premium digital and end to end RF capability. "
For the second quarter of fiscal 2020, Qualcomm expects revenue between $4.9 billion and $5.7 billion.