QUALCOMM Q1 2025 Earnings Report

Tenable EPS Results

• Actual EPS: $2.86
• Consensus EPS: $2.93
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

Tenable Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $10.90 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Tenable Announcement Details

• Quarter: Q1 2025
• Date: 2/5/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, February 5, 2025
• Conference Call Time: 4:45PM ET

Tenable (NASDAQ:TENB) provides cyber exposure solutions for in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. Its platforms include Tenable Vulnerability Management, a cloud-delivered software as a service that provides organizations with a risk-based view of traditional and modern attack surfaces; Tenable Cloud Security, a cloud-native cloud security solutions for security teams to continuously assess the security posture; Tenable Identity Exposure, a solution to secure Active Directory environments; Tenable Web App Scanning, which provides scanning for modern web applications; Tenable Lumin Exposure View, a measurement tool; Tenable Attack Surface Management, an external attack surface management solution; Tenable Security Center, an on-premises solution that provides a risk-based view of an organization's IT, security and compliance posture; and Tenable OT Security, an operational technology security solution which provides threat detection, asset tracking, vulnerability management, and configuration control capabilities. The company also offers Nessus, a vulnerability assessment solution for cybersecurity industry and enterprise platform; and Nessus Expert, that enables users to programmatically detect cloud infrastructure misconfigurations and vulnerabilities in the design and build phase. Tenable Holdings, Inc. was founded in 2002 and is headquartered in Columbia, Maryland.

Akamai Technologies Q1 2025 Earnings Call Transcript

Presentation

[Operator]

and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded 02/05/2025.

[Operator]

Playback number for today's call is (877) 660-6853. For international callers, please dial (201) 612-7415. The playback reservation number is 130Seven-fifty899. I would now like to turn the call over to Mauricio Lopez Edoyen, Vice President of Investor Relations. Mr.

[Operator]

Lopez Edoyen, please go ahead.

[Mauricio Lopez-Hodoyan, VP, Investor Relations at Qualcomm]

Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Christiana Mon and Akash Palkawala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today.

[Mauricio Lopez-Hodoyan, VP, Investor Relations at Qualcomm]

During the call today, we will use non GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward looking statements, including projections and estimates of future events, business or industry trends or business or financial results. Actual events or results could differ materially from those projected in our forward looking statements. Please refer to our SEC filings, including our most recent 10 K, which contain important factors that could cause actual results to differ materially from the forward looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Mon.

[Cristiano Amon, President & CEO at Qualcomm]

Thank you, Maurizio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q1, we delivered record revenues of $11,700,000,000 and non GAAP earnings per share of $3.41 Our chipset business achieved record revenues of $10,100,000,000 the first ten billion dollars quarter for QCT, including record quarterly handset and automotive revenues. Licensing business revenues were $1,500,000,000 We're off to a great start in fiscal 'twenty five. Our mobile roadmap is the strongest in our history with exceptional traction for Snapdragon in premium tier handsets and we are delivering growth across our diversification initiatives.

[Cristiano Amon, President & CEO at Qualcomm]

This quarter, automotive and IoT revenues grew 61% year over year and 36% year over year respectively. We are committed to achieving $22,000,000,000 on non handset revenues by 2029 as outlined during our twenty twenty four Investor Day. Our advanced connectivity, computing and edge AI technologies and product portfolio continue to be highly differentiated and increasingly relevant to a broad range of industries. We also remain very optimistic about the growing edge AI opportunity across our business, particularly as we see the next cycle of AI innovation and scale. DeepSeq R1 and other similar models recently demonstrated that AI models are developing faster, becoming smaller, more capable and efficient and now able to run directly on device.

[Cristiano Amon, President & CEO at Qualcomm]

In fact, DeepSig R1 Distill models were running on Snapdragon powered smartphones and PCs within just a few days of its release. As we enter the era of AI inference, we expect that while training will continue in the cloud, inference will run increasingly on device, making AI more accessible, customizable and efficient. This will encourage the development of more targeted, purpose oriented models and applications, which we anticipate will drive increased adoption and in turn demand for Qualcomm platforms across a range of devices. With the industry's most powerful and efficient AI processors for the edge, we're well positioned to drive this transition and benefit from this upcoming inflection point. Let me now share some key highlights from the business.

[Cristiano Amon, President & CEO at Qualcomm]

In handsets, we're pleased that the recently launched Samsung Galaxy S25 series of smartphones will be powered by the Snapdragon eight Elite for Galaxy globally. The Snapdragon eight Elite for Galaxy delivers the latest AI experiences showcasing one of the best integrations of GALAX AI and Google Gemini. We are encouraged by the number of AI features, which has nearly doubled in the GALAX S25 series. We expect this trend to continue as part of the transition to AI smartphones. We're extremely proud of this launch and our long standing strategic partnerships with Samsung and Google.

[Cristiano Amon, President & CEO at Qualcomm]

As a reminder, the Snapdragon eight Elite is our most powerful mobile platform to date, featuring the industry's fastest custom CPU, the most powerful NPU, incredible GPU performance and the best camera. In addition to Samsung, we're very pleased with the design traction and strong end customer demand for recently launched Snapdragon eight Elite Power flagship smartphones by Chinese OEMs. Our design win momentum in PCs has also increased with more than 80 designs in production or development on our category leading Snapdragon X series platforms, and we're targeting more than 100 designs to be commercialized through 2026. Importantly, we recently announced our newest compute platform, the Snapdragon X, specifically designed to address PCs in the $600 price range, further expanding our addressable opportunity. Snapdragon X features best in class performance, multi day battery life, powerful on device AI and CoPilot Plus experiences.

[Cristiano Amon, President & CEO at Qualcomm]

We look forward to PCs powered by Snapdragon X from leading OEMs, including Acer, Asus, Dell, HP and Lenovo in the coming months. In partnership with Lenovo, we introduced the world's first mini desktop AI PCs powered by the Snapdragon X series. These devices redefine compact computing in a new form factor ideal for developers, consumers and enterprises. The number of NPU powered on device AI experiences running natively on Snapdragon has continued to grow with more than 50 AI applications now optimized for Windows 11, including apps for enterprise collaboration, productivity, creativity and more. Microsoft also announced it is bringing NPU optimized versions of DeepSeek R1 directly to CoPilot Plus PCs beginning with the Qualcomm Snapdragon X series.

[Cristiano Amon, President & CEO at Qualcomm]

Additionally, the broader app ecosystem continues to expand with Snapdragon native apps now including 20 of the most popular VPNs, 50 of the most popular security and cloud storage apps as well as new applications for creators. While we're still in the early phase of the transition to CoPilot plus PCs, we are pleased with consumer reception for our Snapdragon X series, which has exceeded our expectations. According to Sirkanah, in December, Snapdragon X series had more than 10% share of the greater than $800 window laptops in U. S. Retail.

[Cristiano Amon, President & CEO at Qualcomm]

In XR, we remain the preferred solutions provider for VR, MR and AR across major OEMs and ecosystems, and our strategic long term collaborations with Meta and other key partners are playing a key role in growing this area. The Snapdragon based Ray Ban meta glasses continue to exceed expectations as they adopt more AI features. We remain optimistic that we are at the beginning of an inflection point for smart glasses to gain scale as they become wearable AI. Additionally, at the recent XR unlocked event, Google announced Android XR and we are pleased that the first device available for purchase later this year will be built by Samsung and powered by the Snapdragon XR platform. We continue to expand our industrial IoT portfolio of products and solutions, and we are encouraged by the positive reception across multiple industry verticals, including energy and utilities, robotics, manufacturing, warehousing and logistics, retail, enterprise and commercial.

[Cristiano Amon, President & CEO at Qualcomm]

At CES, we introduced our AI on prem appliance and inference suite, which enables generative AI inference and computer vision workloads to run on dedicated on premises hardware, allowing sensitive customer data, fine tune models and inference loads to remain within the enterprise. The AI Inference suite provides ready to use AI applications and agents, tools and libraries to easily operationalize AI and GenAI applications in a variety of deployments on premise or in the cloud. Our first wave partners for these new platforms include Honeywell, IBM and others. We also announced the next evolution of Qualcomm Aware, our cloud based asset visibility platform. As a horizontal enablement platform, Qualcomm Aware allows for a highly integrated way to add cloud based observability and insights, geolocation, fine indoor positioning, firmware updates and device management services to connected devices.

[Cristiano Amon, President & CEO at Qualcomm]

In edge networking, we're pleased with the momentum in Wi Fi seven with recent product launches from Cisco, Charter, eero, Netgear, Nokia and Ubiquiti. We're also seeing strong traction for our five gs fixed wireless access with next generation design wins at operators in North America and India. We continue to strengthen our position in automotive as the industry's leading technology partner for the software defined vehicle, AI powered in cabin systems, advanced driver assistance and connected car experiences. At CES, we announced new collaborations with Alpine, Amazon, Google, Leapmotor, Mahindra and Hyundai Mobis, which will use Snapdragon digital chassis solutions to drive AI powered in cabin and advanced driver assistance systems. We also expanded our partnerships with several Tier one suppliers to now utilize the Snapdragon Cockpit Elite platform, including with Panasonic Automotive Systems, Garmin and DISA SV.

[Cristiano Amon, President & CEO at Qualcomm]

These collaborations will bring advanced intelligence, including generative AI to all levels of software defined vehicles, enabling automakers to build safe and extraordinary user experiences. We're very pleased with the strong industry reception to Snapdragon Cockpit Elite platform since its launch late last year. Our new collaboration with Hyundai Mobis will combine the Snapdragon RIDE FLAC system on chip and the Snapdragon RIDE automated driving stack with Hyundai Mobius cutting edge software and sensors. This will deliver a comprehensive system solution that powers advanced infotainment and advanced driver assistance systems, bringing a one of a kind user experience to future vehicles. Another significant milestone was the launch of the Snapdragon Digital Chassis Workbench, a cloud based workflow for developers building this software defined vehicle.

[Cristiano Amon, President & CEO at Qualcomm]

To complement the hardware and software of the Snapdragon Digital Chassis, Workbench provides a complete development and test environment to build and deploy automotive applications. Finally, we remain very pleased with the execution of our QTL business in recent years and we're well positioned to maintain fiscal 'twenty four revenue scale going forward. Over the past year, we've extended key agreements with major OEMs and we're poised to shortly execute new long term license agreements with two additional large OEMs. We also recently signed Transient to a long term four gs license to go along with the five gs license signed in the last fiscal year. Our progress reaffirms QTL as the industry's most extensive licensing program of cellular essential patents.

[Cristiano Amon, President & CEO at Qualcomm]

Before I turn the call over to Akash, I would like to provide an update on the ARM versus Qualcomm trial from December 2024. The jury's verdict vindicated Qualcomm's CPU innovations and affirm that Qualcomm's contract with Arm provides a license for Qualcomm's products containing our proprietary Orion CPUs in industries such as smartphones, automotive, next generation PCs, IoT and data center. In addition, ARM recently notified us that it was withdrawing its 10/22/2024 notice of breach and indicated that it has no current plan to terminate the Qualcomm architecture license agreement. We're excited to continue to develop performance leading world class products that benefit consumers worldwide that include our incredible Orion custom CPUs. I will now turn the call to Akash.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Thank you, Cristiano, and good afternoon, everyone. I'll start with a summary of our record performance in the first fiscal quarter. We are pleased to announce revenues of $11,700,000,000 and non GAAP EPS of $3.41 both of which were above the high end of our guidance. QTL revenues of $1,500,000,000 and EBT margin of 75% were in line with expectations. QCT delivered record revenues of 10,100,000,000 which was above the high end of our guidance on outperformance across Android handsets, IoT and automotive.

[Akash Palkhiwala, CFO & COO at Qualcomm]

QCT handsets revenues were a record $7,600,000,000 with 13% year over year growth reflecting higher volume and content increase in Android premium tier driven by industry leading performance of our newly launched Snapdragon eight Elite platform. Higher volume in Android Premium Tier in the quarter was driven by stronger end consumer demand for recently launched flagship smartphones and global share in Samsung Galaxy S25 devices. UCT IoT revenues of $1,500,000,000 increased 36% year over year, driven by new product launches with our industry leading processors and on device AI capability across consumer networking and industrial. We delivered our sixth consecutive quarter of record QCT automotive revenues of $961,000,000 representing 61% year over year growth on continued content increase in new vehicle launches as automakers deploy our high performance low power computing and connectivity chips to bring next generation experiences to consumers. QCT EBT margins of 32% exceeded the high end of our guidance, reflecting the benefit of revenue upside and operating leverage.

[Akash Palkhiwala, CFO & COO at Qualcomm]

QCT EBT dollars of $3,200,000,000 increased by 25% versus the year ago period. Lastly, we returned $2,700,000,000 to stock holders, including $1,800,000,000 in stock repurchases and $942,000,000 in dividends. Now turning to guidance. For the second fiscal quarter, we are forecasting non GAAP revenues of $10,200,000,000 to $11,000,000,000 and non GAAP EPS of $2.7 to $2.9 In QTL, we estimate revenues of $1,250,000,000 to $1,450,000,000 and EBT margins of 69% to 73%, reflecting normal seasonality for handset units. In QCT, we expect revenues of $8,900,000,000 to $9,500,000,000 and EBT margins of 29% to 31% with strong year over year growth across handsets, IoT and automotive.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We expect QCT handset revenues to grow by approximately 10% on a year over year basis, including the benefit of increased shipment for Samsung Galaxy S25 smartphones. On a sequential basis, the decline in QCT handset revenues is primarily driven by seasonality in shipments to Apple. We expect IoT and automotive revenues to grow by approximately 1550% respectively versus the year ago period, driven by the strong product momentum I just outlined. Lastly, we estimate non GAAP operating expenses to be approximately $2,250,000,000 In closing, we are very pleased with our strong first quarter results with new records across the following metrics: total company revenue, non GAAP EPS, QCT revenues, QCT handset revenues and QCT automotive revenues. In QTL, we finalized renewal negotiations for long term licenses with two key Chinese OEMs and expect to execute those agreements shortly.

[Akash Palkhiwala, CFO & COO at Qualcomm]

We also recently signed Transient to a long term four gs license in addition to the five gs license signed in the last fiscal year. With these additional long term agreements, we expect fiscal twenty twenty five QTL revenues to be consistent with fiscal twenty twenty four. Our recent product announcements at CES across PC, automotive, consumer and industrial IoT, along with the continued performance leadership in premium tier Android handsets, underscore our position as the connected computing leader across edge devices. Lastly, as AI approaches an inflection point of scaling at the edge, our leadership in high performance on device inference solutions positions us to benefit as we lead this transition. This concludes our prepared remarks.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Back to you, Mauricio.

[Mauricio Lopez-Hodoyan, VP, Investor Relations at Qualcomm]

Thank you, Kaush. Operator, we're now ready for questions.

[Operator]

Thank First question comes from the line of Joshua Buckhalter with TD Cowen. Please proceed with your question.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Hey guys, thanks for taking my question. I guess to start, I wanted to clarify the QTL guidance. So you're talking to sort of flat or levels in fiscal twenty twenty five versus 2024. I know you signed the two agreements recently. Could you maybe speak to how we should think about your assumptions on overall unit shipments and the royalty per unit tracking through the year?

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Thank you.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Joshua, it's Sakash. I think our overall assumption on the market is that it is either flat or gross low single digits on a year over year basis. Now of course, this doesn't take into account upside opportunities in terms of the China subsidy and the AI replacement rate. But the baseline assumption is what goes into the QTL forecast that we just gave.

[Operator]

Our next question comes from the line of Sameek Chatterjee with JPMorgan. Please proceed with your question.

[Samik Chatterjee, Executive Director at JP Morgan]

Hi, Sameek. Thank you for taking my questions. And I have a couple of questions, but maybe if I can start off on the PC platform and particularly Snapdragon X. Maybe, Cristiano, if you can sort of talk about how you're sort of thinking about 2025 and 2026 playing out in terms of device launches on your Snapdragon platform for PCs? And particularly more interested in hearing how you're now thinking about the adoption curve between enterprises and consumers?

[Samik Chatterjee, Executive Director at JP Morgan]

What are you hearing from the OEM partners in terms of how to think about the adoption curve relative to enterprise and consumer as we go look for the next couple of years? And I have a quick follow-up after that.

[Cristiano Amon, President & CEO at Qualcomm]

Very good, Samek. Thank you for your question. Look, we're very happy with the trajectory that we are on PCs. Maybe I'll start answering the question by providing some bookends, right? We said at the Investor Day last year that we expect to get $4,000,000,000 in Windows PC revenue by 2029.

[Cristiano Amon, President & CEO at Qualcomm]

We actually said at that time $4,000,000,000 out of a $35,000,000,000 if I'm not mistaken, Sam, which if you calculate, you assume a share about 12% of the market we're addressing. I think we started very well with a number of designs. One metric that we have is the design traction continue. We have now over 80 design wins launched or in development across the X Series, and we're targeting commercialization of more than 100 devices as we go to 2025 to 2026. So design traction is good.

[Cristiano Amon, President & CEO at Qualcomm]

It continued to increase this, which is a good sign. The second data point we actually provided on the script is, we look at The United States retail. We started to expand retail in different markets. We look at United States, which one of the priority markets that we had. And the data shows that the sale within the sale of U.

[Cristiano Amon, President & CEO at Qualcomm]

S. Retail of Windows laptops above $800 we had more than 10% share, which is actually consistent with the projection we made of how we're going to grow under five years. And we like the metric that's early in the process. We're still starting. As I said, we'll continue to expand in markets.

[Cristiano Amon, President & CEO at Qualcomm]

We like the results today and the design traction has continued to increase. The first wave was consumer. Now it's being deployed towards commercial. That's why we have emphasis of showing a lot of the commercial applications now native on Snapdragon from VPN, from security, etcetera. And we're excited, especially because of that, we launched a new product to expand the addressability to now $600 price laptops, which were not compromising AI.

[Cristiano Amon, President & CEO at Qualcomm]

And as I mentioned in the call, actually a few days after Microsoft announced DeepSeq R1 running on Snapdragon X Series laptops first. So actually, we're starting, we're happy with the traction. Consistent with our long term projections, we're just going to keep executing.

[Samik Chatterjee, Executive Director at JP Morgan]

Got it. Got it.

[Samik Chatterjee, Executive Director at JP Morgan]

Thank you for that. And maybe for my follow-up, I can sort of take the cue from what Akash mentioned for the last question, which is China market for smartphones and the subsidies that you're seeing, sort of what are you seeing on the ground in terms of response for the from the consumer to the subsidies? And what are you sort of thinking in terms of the impact to overall the Chinese smartphone OEM and their sort of growth sustainability? And I don't know if Akash, you gave the number in terms of what growth you saw with the Chinese OEMs Chinese Android OEMs this quarter, but how are you thinking about sort of the growth trajectory going forward with them, particularly in light of these subsidies? Thank you.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Sure. So let me address it in parts. So as it relates to the subsidy, as you know, they just began in January. So we are not that far into the cycle. And so we'll have a better view of it next quarter.

[Akash Palkhiwala, CFO & COO at Qualcomm]

In terms of historical reference point, in the past, we've seen that when subsidies have come in, it has improved the size of the market. So there is an opportunity that comes with it, but it's not something that is contemplated yet in our second quarter guidance. Now, let me go back to first quarter because that's where I made the volume comment as well. If you look at the first quarter upside that we had in handsets, very strong performance, record performance and there were two drivers. First is the content increase year over year that we have discussed in detail as more capability gets added to the chipset, it shows up in our price points.

[Akash Palkhiwala, CFO & COO at Qualcomm]

The second was the volume increase that we saw on a year over year basis as well. And when you really look at the volume increase and break it down into drivers, we had higher share of course at Samsung. They are using us globally in the GS25. So that helps purchases that went into the December before the phone launch. The second is we saw higher end consumer demand in China for premium devices.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And if you think about how that happens, it's a long term trend that we've seen in China that the premium tier continues to grow and it's a benefit that showed up in the quarter as well. The second is our customers are gaining share in the China market. And so that is a benefit that translates through as well. So very we feel very good about all those drivers. They're all sustained long term drivers in our business that positions us well as we look at the second half of the fiscal year.

[Operator]

Our next question is coming from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

[Stacy Rasgon, Analyst at Bernstein]

Hi guys. Thanks for taking my questions. For the first one, I wanted to ask about the QTL guide flat year over year. So in the Q, it suggests that you're still negotiating with Huawei and I'm assuming the QTL guide for Q2, which is a little lighter than the normal, has no Huawei in it because of that. Does the annual guide for flat year over year assume that you do not settle Huawei?

[Stacy Rasgon, Analyst at Bernstein]

And if you do renegotiate and get some money for there, would there be upside to that number based on your current assumptions?

[Alex Rogers, President, Qualcomm Technology Licensing (QTL) and Global Affairs at Qualcomm]

Assumptions?

[Alex Rogers, President, Qualcomm Technology Licensing (QTL) and Global Affairs at Qualcomm]

So, basically, what we've managed to accomplish over the last year or so is essentially signing up everybody to extensions. So, we've had a really good run of execution with bringing in transient for four gs, which is a significant development because they've popped up the ranks of OEMs in terms of unit volume, very high up the ranks actually. So, the four gs complements, the five gs license that we have them signed up to and they're transitioning to more five gs content in their overall product offering. And then, we have these last two significant Chinese OEMs that we've signed up or that we finished negotiations with and the execution is just pending return from the Lunar New Year holiday. The Huawei discussions are still in play.

[Alex Rogers, President, Qualcomm Technology Licensing (QTL) and Global Affairs at Qualcomm]

So, the numbers don't actually include the potential from a renewal with Huawei. And basically, everything else is taken care of.

[Stacy Rasgon, Analyst at Bernstein]

Got it. So that flat guidance doesn't include any quality settlement, to be clear?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Correct. Neither the second quarter guidance or the full year comment.

[Stacy Rasgon, Analyst at Bernstein]

Got it. That's great.

[Stacy Rasgon, Analyst at Bernstein]

And for my follow-up, I just want to note, we've seen a fair amount of just in general personal electronics strength recently. And there's some thoughts that maybe some of it might be related to sort of pre tariff pull forward. I don't know if you guys would be able to have any view on that, but do you have any comments on what you might see and whether or not the threat of tariffs might be driving some pre builds or increased demand in the near term?

[Cristiano Amon, President & CEO at Qualcomm]

Yes, absolutely not. I think it's funny, Stacy, we expect everybody to be asking this question. We actually are seeing it's pretty simple, right? So number one is higher than expected, I think, share of Samsung with the launch of GS25 globally. The second thing is end customer demand in China.

[Cristiano Amon, President & CEO at Qualcomm]

And we have data on the sell through. It is basically Snapdragon eight Elite has been quite successful. Demand on smartphones launching will exceed our expectations. It's built on what Akash said. The trend of premium tier continue to expand.

[Cristiano Amon, President & CEO at Qualcomm]

Smartphone is number one consumer electronic device purchase. I think there is a positive launch of AI features. Customers build great devices. They are gaining share in the premium tier. And that is what we're driving demand.

[Cristiano Amon, President & CEO at Qualcomm]

And as Zakash outlined, all of our smartphone products, products from our customers in China using Elite, The price points that they launch those devices in the market, they're all eligible for the subsidy. So that's not contemplated in the Q2 guide, which it could be an interesting development. We saw they usually further expand the premium tier. But this is no inventory. This is no build out ahead of tariffs.

[Cristiano Amon, President & CEO at Qualcomm]

This is end customer demand.

[Operator]

The next question is from the line of Chris Caso with Wolfe Research. Please proceed with your question.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes, thanks. Good evening. I guess following on with those comments, Cristiano, how should we think about June now? Because typically, June, there are no flagship launches and that has some effect on QCT. Given the share gain at Samsung, does that affect the seasonality for June at all?

[Chris Caso, Managing Director at Wolfe Research LLC]

And how should we be thinking that

[Chris Caso, Managing Director at Wolfe Research LLC]

in general?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. I think, Chris, you're right in terms of understanding our seasonality. When you look at the last several years, the framework across quarters, it is driven by the timing of the flagship launches. And so as a result, we expect kind of first quarter to be the high point from an EPS perspective and third quarter is the low point because you don't have as many flagship launches in it. On your question on specifically on Samsung, Samsung is in kind of the impact of the higher share is included in the first quarter and the second quarter guide as well.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And so it will be included in third and fourth quarter as well. So I don't think it fundamentally changes the seasonality across the quarters.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. As a follow-up, if you could address some of the higher price points that you're seeing on Snapdragons now and certainly there are more features in there because of AI, but to some extent it's also about cost too because the wafer costs are higher. What's the impact of that on Qualcomm, not just from a quarter basis, but looking a little bit out, should we expect ASP to be a tailwind for you? And then how are your OEM customers dealing with that? Is it a factor of we're just going to see a mix higher to higher end phones?

[Chris Caso, Managing Director at Wolfe Research LLC]

Or will is that going to result in higher ASP?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Chris, the primary driver here is that there is a consumer demand for more capable smartphones. And so as we go from generation to generation, we're adding a lot more capability on the processing side, on AI side and connectivity and that is showing up in the price points in our chip. So that's the primary driver. Of course, as you're aware, TSMC price increases for three and four nanometer does did kick in, in January. And so as we've said in the past, our objective there is to reflect the cost increases in ASPs over a period of time.

[Akash Palkhiwala, CFO & COO at Qualcomm]

So those are the really the key drivers. When you step back, I think the one of the messages that Krishanu gave earlier is an important one is that the overall market, it's not just about each tier kind of having a more capable chip, but a mix shift across tiers and a larger market for premium devices.

[Operator]

Thank you. The next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions.

[Ross Seymore, Managing Director at Deutsche Bank]

Thanks for letting me ask a question. Just want to ask a more cyclical question, probably most applicable to your IoT segment. That business has been very strong year over year, but you've had a couple of quarters with negative sequential comps. Is that just normal seasonality? Or is there cyclicality involved that some of your broad based peers are seeing?

[Ross Seymore, Managing Director at Deutsche Bank]

Just kind of want to judge where we are in that cyclical trend.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes, Ross. There's definitely one of the big drivers on the quarterly profile is because of consumer IoT and that does have cyclicality involved because you're building for the holiday season. And then when we get into the March, of course, you're past that point. When you look at the other two parts of our IoT business, which is industrial and edge networking, we're consistently seeing strength across the quarters.

[Ross Seymore, Managing Director at Deutsche Bank]

Great to hear. I guess as a follow-up question then switching gears to the gross margin, Nikash, congratulations again. It looks like you kept that in QCT pretty much flat sequentially despite your thought that it was going to go down in the December. Is that something that is just structurally going to be a little higher than that, I guess, kind of implied 48% to 49% range? And if so, what's changed?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. The gross margin, both in our December and our March, benefits from the fact that we have stronger premium tier volume that improves the mix overall mix of our portfolio and that shows up in gross margin. So that's kind of primary driver of the strength. And so as you see the mix changes, it will flow through the margin numbers. But yes, we are very happy just like you that the margins have been very strong.

[Operator]

Our next question is from the line of Timothy Arcuri with UBS. Please proceed with your questions.

[Timothy Arcuri, Managing Director at UBS Group]

Thanks a lot. I had two. Cristiano, is there any evolution in the way you're thinking about the modem situation at your large customer? I know there's been some back and forth on that recently. Is there any change there?

[Timothy Arcuri, Managing Director at UBS Group]

Are you feeling like maybe you'll be there a little bit longer than you had expected? That's the first question.

[Cristiano Amon, President & CEO at Qualcomm]

Yes. The answer is no. I think we're really operating with the assumptions. I think we've been very clear, I think, what those things are. We expect 20% share for the launch that happens in 2026 and the current agreement ends after that.

[Cristiano Amon, President & CEO at Qualcomm]

We're assuming no renewal, so which means nothing in 2027. For 2025 launches, we expect share to be between 10020%. So we don't know. But I think we've been very clear about how we're modeling that business, and I think that's the assumption going forward.

[Timothy Arcuri, Managing Director at UBS Group]

Thanks a lot. Akash, can you give us an idea of how big the PC business was within IoT? You said you were 10% I think of the $800 or sorry, the above $800 laptop market in The U. S. I'm guessing you did about $100,000,000 a little bit more than $100,000,000 in December.

[Timothy Arcuri, Managing Director at UBS Group]

Is that close? Thanks.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes, Tim, it's Akash. So from an overall revenue perspective, I think the way we've set it up is we've set targets long term for '29 for each of these areas and we plan to give an annual update on each of those targets. We're not breaking it down every quarter by area. To me, what's the most important thing on the PC is the market that we were playing in, which is devices over $800 and our focus on retail to begin with, we're very happy that we were able to get 10% share. I think just as Kushano said earlier, if we equate that to our long term target, which is 12% of the overall market, that's a great start towards the number we'd set up.

[Operator]

Thank you. Our last question is from the line of Tal Biyani with Bank of America. Please proceed with your questions.

[Tal Liani, Analyst at Bank of America]

Hi, guys. I want to focus on

[Tal Liani, Analyst at Bank of America]

a 20% growth of smartphones and QCT this quarter. And the question is how long will this continue? The market itself is not growing. There was last quarter there was growth in China that was very strong. This quarter we had the initial of Samsung.

[Tal Liani, Analyst at Bank of America]

So can you talk about longevity of the current trend? How long can it continue? Could you grow even if the market doesn't grow? And then just an update on China demand? Thanks.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Sure, Tal. So let me break it down. If you look at our year over year performance in QCT handsets, we were up 13%. And as I said earlier, the drivers of those is really a combination of higher volume and higher ASPs. The ASPs as content increase, which we've talked about, we've seen consistently that continue to increase over the last several years.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And as we look forward, we think that's very sustainable, just we're adding a lot more capability to the device and the consumers are looking for that opportunity. In terms of volume, one of the key metrics for us is the fact that the premium tier continues to grow. So, if you look at the last three or four years, devices greater than $400 have gone from being 21% of the market to now over 30% of the market. And so that is a trend that's incredibly positive for us because that's the market that we are very strong in. And so we have a combination of the units within that part of the market is growing very quickly and within that our content is growing as well.

[Akash Palkhiwala, CFO & COO at Qualcomm]

And those are the two factors that drive the handset growth of 13% on a year over year basis. When you look at the March, we're guiding handset growth of 10% on a year over year basis, which is again a very strong number. So pretty happy with how we are set up in that business and both in the first half of the year and it positions us well as we look forward.

[Akash Palkhiwala, CFO & COO at Qualcomm]

Can

[Akash Palkhiwala, CFO & COO at Qualcomm]

you repeat a question on that, Tal, please?

[Tal Liani, Analyst at Bank of America]

I said just China. China was strong the last few quarters. Can you give a maybe I missed it, but what's the current trends in China?

[Akash Palkhiwala, CFO & COO at Qualcomm]

Yes. I think China definitely is strong in the premium tier. We've seen that part of the market grow. We've also seen our customers gain share within that market. And then last thing is, we're going to have subsidies come in and so that is a potential that benefits that part of the market as well.

[Akash Palkhiwala, CFO & COO at Qualcomm]

So pretty, I think positive tailwinds for us there.

[Operator]

Thank you. That concludes today's question and answer session. Mr. Ramon, do you have anything further to add before joining the call?

[Cristiano Amon, President & CEO at Qualcomm]

Just I'd like to

Participants

Analysts

• Mauricio Lopez-Hodoyan, VP, Investor Relations at Qualcomm
• Cristiano Amon, President & CEO at Qualcomm
• Akash Palkhiwala, CFO & COO at Qualcomm
• Joshua Buchalter, Director - Equity Research at TD Cowen
• Samik Chatterjee, Executive Director at JP Morgan
• Stacy Rasgon, Analyst at Bernstein
• Alex Rogers, President, Qualcomm Technology Licensing (QTL) and Global Affairs at Qualcomm
• Chris Caso, Managing Director at Wolfe Research LLC
• Ross Seymore, Managing Director at Deutsche Bank
• Timothy Arcuri, Managing Director at UBS Group
• Tal Liani, Analyst at Bank of America