Qualcomm FY24Q2 corresponds to calendar Q1 2024 (Jan/Feb/Mar).
Qualcomm FY24Q2 Earnings:
Revenue $9.389B, up 1% year over year, down 6% sequentially (revenue peak was FY22 Q4 at $11.4B).
GAAP gross margin 56%, up 1.1 percentage points year over year, down 0.3 percentage points sequentially.
GAAP net income was $2.326B, up 37% year over year, double-digit growth for the second consecutive quarter, down 16% sequentially (net income peak was FY22 Q3 at $3.7B).
Business Segments:
Handset revenue $6.18B, up 1% year over year, accounting for 66% of revenue; expect 2024 handset units flat to slightly up year over year, 5G handset units up high single to low double digits; Chinese Android OEM revenue up 40% year over year in H1 fiscal, driven by high-end model demand, no sign of weakness in China high-end Android demand.
Snapdragon 8 Gen 4 uses a custom non-reference CPU and bundles modem/RF products, both of which will lift ASP; on Huawei's return, management continues to view it as China high-end market TAM expansion, expects no Huawei handset revenue in FY25.
QCT vs QTL divergence mainly because QCT benefits from high-ASP handsets, which contribute less to QTL.
Automotive revenue was $603M, up 35% year over year, marking the 14th consecutive quarter of double-digit year-over-year growth and the third consecutive quarter of record highs, accounting for 6% of revenue; design win pipeline was $45B, of which one-third is ADAS; the $4B automotive revenue target for FY26 remains on track.
IoT revenue was $1.243B, down 11% year over year, the fifth consecutive quarter of double-digit year-over-year decline, accounting for 13% of revenue; IoT bottomed last quarter, expected to recover sequentially through Q4; IoT mobile-related demand recovering, industrial/networking demand awaiting industry recovery.
X Elite/Plus laptops to debut at Microsoft Build, launching mid-year for back-to-school; PC revenue mainly in FY25, next quarter will update design win data.
Guided FY24 Q3: handset revenue down mid-single digits sequentially, IoT up low to mid single digits, automotive up low double digits.
Overall, Qualcomm this quarter benefited from strong China Android recovery, barely keeping core handset business growing. In non-handset, only automotive stood out; the much-anticipated PC may not ramp until year-end.
Qualcomm's prior net income peak was $12.9B (FY22). Based on FY24Q3 net income guidance, TTM is $8.7B. Applying a long-term 20x P/E midpoint yields a valuation range of $174B–$258B. Qualcomm's valuation has always been constrained by uncertainties such as Apple exposure and China exposure. (FY23 China revenue share was 62% by customer sales location, ~40% by customer headquarters.)