Qualcomm Q2 2013 earnings: revenue up to $6.12 billion, profit reaches $2.07 billion
Qualcomm is having an easy time riding the growing wave of mobile devices. Case in point: its very healthy second quarter earnings. Revenue at the San Diego outfit climbed 24 percent year-over-year to $6.12 billion, while the chip designer's net profit grew a similarly brisk 17 percent, to $2.07 billion. The figures were respectively up a modest 2 percent and down 6 percent versus last quarter, but that's to be expected given the usual post-holiday lull. Qualcomm still shipped a more than ample 173 million units of its MSM chips, and it expects to return $431 million to shareholders for their trust. The company also has a rosy-cheeked vision of the future -- it expects its third quarter revenues and profits to climb by at least 25 percent and 14 percent each, even with shipments down to as little as 163 million. When Qualcomm is at the heart of the HTC One, many Galaxy S 4 models and the Optimus G Pro, there's a good chance the company is being realistic about its prospects.
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Qualcomm Announces Second Quarter Fiscal 2013 Results
Revenues $6.1 Billion
GAAP EPS $1.06, Non-GAAP EPS $1.17
- Record Quarterly Revenues; Raising Fiscal 2013 Guidance -
SAN DIEGO, April 24, 2013 /PRNewswire-FirstCall/ -- Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the second quarter of fiscal 2013 ended March 31, 2013.
"We delivered another strong quarter as the worldwide adoption of smartphones continues," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "Looking forward, we are seeing strong traction with our new Qualcomm Snapdragon 600 and 800 processors, and we continue to expect healthy growth in 3G and 3G/4G multimode devices around the world. We are pleased to be raising our calendar 2013 3G/4G device shipment estimates and our revenue and earnings guidance for fiscal 2013."
Second Quarter Results (GAAP)
Revenues: 1 $6.12 billion, up 24 percent year-over-year (y-o-y) and 2 percent sequentially.
Operating income: 1 $1.88 billion, up 24 percent y-o-y and down 10 percent sequentially.
Net income: 2 $1.87 billion, down 16 percent y-o-y* and 2 percent sequentially.
Diluted earnings per share: 2 $1.06, down 17 percent y-o-y* and 3 percent sequentially.
Effective tax rate: 1 13 percent for the quarter.
Operating cash flow: $2.22 billion, up 17 percent y-o-y; 36 percent of revenues.
Return of capital to stockholders: $431 million, or $0.25 per share, of cash dividends paid.
* The second quarter of fiscal 2012 GAAP results included $761 million, net of income taxes, or $0.44 per share, for discontinued operations as a result of a $1.2 billion pre-tax gain associated with the sale of substantially all of our 700 MHz spectrum.
1 Throughout this news release, fiscal 2012 results for FLO TV are presented as discontinued operations. Revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before adjustments for noncontrolling interests and, for fiscal 2012, discontinued operations), unless otherwise stated.
2 Throughout this news release, net income and diluted earnings per share are attributable to Qualcomm (i.e., after adjustments for noncontrolling interests and discontinued operations), unless otherwise stated.
Non-GAAP Second Quarter Results
Non-GAAP results exclude the QSI segment and certain share-based compensation, acquisition-related items and tax items.
Revenues: $6.12 billion, up 24 percent y-o-y and 2 percent sequentially.
Operating income: $2.23 billion, up 18 percent y-o-y and down 9 percent sequentially.
Net income: $2.07 billion, up 17 percent y-o-y and down 6 percent sequentially.
Diluted earnings per share: $1.17, up 16 percent y-o-y and down 7 percent sequentially.
Effective tax rate: 16 percent for the quarter.
Free cash flow (defined as net cash from operating activities less capital expenditures): $1.99 billion, up 10 percent y-o-y; 33 percent of revenues.
Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included within this news release.
Second Quarter Key Business Metrics
MSM™ chip shipments: 173 million units, up 14 percent y-o-y and down 5 percent sequentially.
December quarter total reported device sales: approximately $61.1 billion, up 18 percent y-o-y and 15 percent sequentially.
December quarter estimated 3G/4G device shipments: approximately 279 to 283 million units, at an estimated average selling price of approximately $214 to $220 per unit.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $30.5 billion at the end of the second quarter of fiscal 2013, compared to $26.6 billion a year ago and $28.4 billion at the end of the first quarter of fiscal 2013. On April 9, 2013, we announced a cash dividend of $0.35 per share payable on June 26, 2013 to stockholders of record as of June 5, 2013, which represents a 40 percent increase over our prior quarterly dividend.
Research and Development
($ in millions) | Non-GAAP | QSI | Share-Based Compensation | Acquisition-Related Items | GAAP | ||||
Second quarter fiscal 2013 | $ 1,056 | $ 1 | $ 156 | $ 1 | $ 1,214 | ||||
As % of revenues | 17% | 20% | |||||||
Second quarter fiscal 2012 | $ 824 | $ 4 | $ 126 | $ - | $ 954 | ||||
As % of revenues | 17% | 19% | |||||||
Year-over-year change ($) | 28% | N/M | 24% | N/M | 27% |
N/M - Not Meaningful
Non-GAAP research and development (R&D) expenses increased 28 percent y-o-y primarily due to an increase in costs related to the development of CDMA-based 3G, OFDMA-based 4G LTE and other technologies for integrated circuit and related software products and to expand our intellectual property portfolio.
Selling, General and Administrative
($ in millions) | Non-GAAP | QSI | Share-Based | Acquisition-Related Items | GAAP | ||||
Second quarter fiscal 2013 | $ 556 | $ 4 | $ 95 | $ 6 | $ 661 | ||||
As % of revenues | 9% | 11% | |||||||
Second quarter fiscal 2012 | $ 488 | $ 4 | $ 97 | $ 6 | $ 595 | ||||
As % of revenues | 10% | 12% | |||||||
Year-over-year change ($) | 14% | N/M | (2%) | N/M | 11% |
N/M - Not Meaningful
Non-GAAP selling, general and administrative (SG&A) expenses increased 14 percent y-o-y primarily due to increases in employee-related expenses, patent-related expenses and selling and marketing expenses.
Effective Income Tax Rates
Our fiscal 2013 annual effective income tax rates are estimated to be approximately 16 percent for GAAP and approximately 17 to 18 percent for Non-GAAP. The second quarter effective income tax rates were 13 percent for GAAP and 16 percent for Non-GAAP, which are lower than the estimated annual effective tax rates primarily as a result of the retroactive reinstatement of the federal R&D tax credit during the second quarter. The federal R&D tax credit benefit that related to fiscal 2012 of $0.04 per share was excluded from Non-GAAP results.
QSI Segment
QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum. GAAP results for the second quarter of fiscal 2013 included $0.02 earnings per share for QSI.
Business Outlook
The following statements are forward looking, and actual results may differ materially. The "Note Regarding Forward-Looking Statements" in this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks.
Our outlook does not include provisions for future asset impairments or for pending legal matters, other than future legal amounts that are probable and estimable. Further, due to their nature, certain income and expense items, such as realized investment and certain derivative gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our business outlook to the extent they are reasonably certain; however, actual results may vary materially from the business outlook.
The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook. The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.
Qualcomm's Business Outlook Summary | ||||||
THIRD FISCAL QUARTER | ||||||
Q3 FY12 | Current Guidance | |||||
Revenues | $4.63B | $5.8B - $6.3B | ||||
Year-over-year change | increase 25% - 36% | |||||
Non-GAAP Diluted earnings per share (EPS) | $0.85 | $0.97 - $1.05 | ||||
Year-over-year change | increase 14% - 24% | |||||
Diluted EPS attributable to QSI | ($0.01) | $0.00 | ||||
Diluted EPS attributable to share-based compensation | ($0.12) | ($0.13) | ||||
Diluted EPS attributable to acquisition-related items | ($0.03) | ($0.04) | ||||
GAAP Diluted EPS | $0.69 | $0.80 - $0.88 | ||||
Year-over-year change | increase 16% - 28% | |||||
Metrics | ||||||
MSM chip shipments | 141M | 163M - 173M | ||||
Year-over-year change | increase 16% - 23% | |||||
Total reported device sales (1) | approx. $47.8B* | approx. $51.0B - $56.0B* | ||||
Year-over-year change | increase 7% - 17% | |||||
*Est. sales in March quarter, reported in June quarter | ||||||
FISCAL YEAR | ||||||
FY 2012 | Prior Guidance | Current Guidance | ||||
Revenues | $19.12B | $23.4B - $24.4B | $24.0B - $25.0B | |||
Year-over-year change | increase 22% - 28% | increase 26% - 31% | ||||
Non-GAAP Diluted EPS | $3.71 | $4.25 - $4.45 | $4.40 - $4.55 | |||
Year-over-year change | increase 15% - 20% | increase 19% - 23% | ||||
Diluted EPS attributable to QSI | $0.40 | ($0.02) | $0.01 | |||
Diluted EPS attributable to share-based compensation | ($0.47) | ($0.51) | ($0.51) | |||
Diluted EPS attributable to acquisition-related items | ($0.14) | ($0.15) | ($0.16) | |||
Diluted EPS attributable to tax items | $0.01 | $0.04 | $0.04 | |||
GAAP Diluted EPS | $3.51 | $3.61 - $3.81 | $3.78 - $3.93 | |||
Year-over-year change | increase 3% - 9% | increase 8% - 12% | ||||
Metrics | ||||||
Est. fiscal year* 3G/4G device average selling price range (1) | approx. $216 - $222 | approx. $214 - $226 | approx. $216 - $224 | |||
*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters | ||||||
CALENDAR YEAR Device Estimates (1) | ||||||
Prior Guidance | Current | Prior Guidance | Current Guidance | |||
Est. 3G/4G device shipments | ||||||
March quarter | approx. 206M - 211M | approx. 206M - 211M | not provided | not provided | ||
June quarter | approx. 210M - 214M | approx. 210M - 214M | not provided | not provided | ||
September quarter | approx. 233M - 237M | approx. 233M - 237M | not provided | not provided | ||
December quarter | not provided | approx. 279M - 283M | not provided | not provided | ||
Est. calendar year range (approx.) | 915M - 940M | 928M - 945M | 1,000M - 1,070M | 1,015M - 1,085M | ||
Est. calendar year midpoint (approx.) (4) | 928M | 937M | 1,035M | 1,050M | ||
(1) | Total reported device sales is the sum of all reported sales in U.S. dollars (as reported to us by our licensees) of all licensed CDMA-based, OFDMA-based and CDMA/OFDMA multimode subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period (collectively, 3G/4G devices). The reported quarterly estimated ranges of average selling prices (ASPs) and unit shipments are determined based on the information as reported to us by our licensees during the relevant period and our own estimates of the selling prices and unit shipments for licensees that do not provide such information. Not all licensees report sales, selling prices and/or unit shipments the same way (e.g., some licensees report selling prices net of permitted deductions, such as transportation, insurance and packing costs, while other licensees report selling prices and then identify the amount of permitted deductions in their reports), and the way in which licensees report such information may change from time to time. Total reported device sales, estimated unit shipments and estimated ASPs for a particular period may include prior period activity that was not reported by the licensee until such particular period. |
(2) | FY 2012 results for QSI and GAAP included $0.44 EPS related to a $1.2 billion gain associated with the sale of substantially all of our 700 MHz spectrum, which was recognized in discontinued operations and was excluded from Non-GAAP results. |
(3) | FY 2013 guidance for tax items includes $0.04 EPS related to a tax benefit that resulted from the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012, which was excluded from Non-GAAP results. |
(4) | The midpoints of the estimated calendar year ranges are identified for comparison purposes only and do not indicate a higher degree of confidence in the midpoints. |
Sums may not equal totals due to rounding. |
SEGMENTS | QCT | QTL | QWI | Non-GAAP Reconciling Items (1) | Non-GAAP (2) | QSI (2) |
| Acquisition- Related Items (2) | Tax Items | GAAP |
Q2 - FISCAL 2013 | ||||||||||
Revenues | $3,916 | $2,057 | $155 | ($4) | $6,124 | $ - | $ - | $ - | $ - | $6,124 |
Change from prior year | 28% | 19% | (3%) | N/M | 24% | 24% | ||||
Change from prior quarter | (5%) | 17% | 6% | 20% | 2% | 2% | ||||
Operating income (loss) | $2,233 | ($5) | ($268) | ($83) | $ - | $1,877 | ||||
Change from prior year | 18% | 94% | (12%) | (46%) | 24% | |||||
Change from prior quarter | (9%) | 38% | 5% | (19%) | (10%) | |||||
EBT | $681 | $1,803 | $ - | ($30) | $2,454 | $33 | ($268) | ($83) | $ - | $2,136 |
Change from prior year | 14% | 17% | N/M | N/M | 15% | N/M | (12%) | (46%) | 23% | |
Change from prior quarter | (36%) | 18% | N/M | N/M | (9%) | N/M | 5% | (19%) | (8%) | |
EBT as % of revenues | 17% | 88% | N/M | N/M | 40% | 35% | ||||
Net income (loss) | $2,066 | $36 | ($220) | ($80) | $ 64 | $1,866 | ||||
Change from prior year | 17% | (95%) | (20%) | (54%) | N/A | (16%) | ||||
Change from prior quarter | (6%) | N/M | 0% | (19%) | N/A | (2%) | ||||
Diluted EPS | $1.17 | $0.02 | ($0.12) | ($0.05) | $0.04 | $1.06 | ||||
Change from prior year | 16% | (95%) | (9%) | (67%) | N/A | (17%) | ||||
Change from prior quarter | (7%) | N/M | 0% | (25%) | N/A | (3%) | ||||
Diluted shares used | 1,763 | 1,763 | 1,763 | 1,763 | 1,763 | 1,763 | ||||
Q1 - FISCAL 2013 | ||||||||||
Revenues | $4,120 | $1,757 | $146 | ($5) | $6,018 | $ - | $ - | $ - | $ - | $6,018 |
Operating income (loss) | 2,447 | (8) | (281) | (70) | - | 2,088 | ||||
EBT | $1,068 | $1,532 | ($3) | $98 | 2,695 | (17) | (281) | (70) | - | 2,327 |
Net income (loss) | 2,204 | (12) | (219) | (67) | - | 1,906 | ||||
Diluted EPS | $1.26 | ($0.01) | ($0.12) | ($0.04) | $ - | $1.09 | ||||
Diluted shares used | 1,751 | 1,751 | 1,751 | 1,751 | 1,751 | 1,751 | ||||
Q2 - FISCAL 2012 | ||||||||||
Revenues | $3,059 | $1,723 | $159 | $2 | $4,943 | $ - | $ - | $ - | $ - | $4,943 |
Operating income (loss) | 1,900 | (89) | (240) | (57) | - | 1,514 | ||||
EBT | $599 | $1,540 | ($10) | $1 | 2,130 | (99) | (240) | (57) | - | 1,734 |
Discontinued operations, net of tax | - | 761 | - | - | - | 761 | ||||
Net income (loss) | 1,759 | 707 | (184) | (52) | - | 2,230 | ||||
Diluted EPS | $1.01 | $0.41 | ($0.11) | ($0.03) | $ - | $1.28 | ||||
Diluted shares used | 1,743 | 1,743 | 1,743 | 1,743 | 1,743 | 1,743 | ||||
Q3 - FISCAL 2012 | ||||||||||
Revenues | $2,869 | $1,593 | $160 | $4 | $4,626 | $ - | $ - | $ - | $ - | $4,626 |
Operating income (loss) | 1,718 | (11) | (264) | (61) | - | 1,382 | ||||
EBT | $472 | $1,407 | ($6) | $49 | 1,922 | (16) | (264) | (61) | - | 1,581 |
Discontinued operations, net of tax | - | (3) | - | - | - | (3) | ||||
Net income (loss) | 1,486 | (11) | (210) | (58) | - | 1,207 | ||||
Diluted EPS | $0.85 | ($0.01) | ($0.12) | ($0.03) | $ - | $0.69 | ||||
Diluted shares used | 1,758 | 1,758 | 1,758 | 1,758 | 1,758 | 1,758 | ||||
SEGMENTS | QCT | QTL | QWI | Non-GAAP Reconciling Items (1) | Non-GAAP (2) | QSI (2) |
| Acquisition- Related Items (2) | Tax Items | GAAP |
6 MONTHS - FISCAL 2013 | ||||||||||
Revenues | $8,036 | $3,813 | $301 | ($7) | $12,143 | $ - | $ - | $ - | $ - | $12,143 |
Change from prior year | 31% | 21% | (3%) | N/M | 26% | 26% | ||||
Operating income (loss) | $4,681 | ($12) | ($549) | ($154) | $ - | $3,966 | ||||
Change from prior year | 24% | 88% | (13%) | (32%) | 29% | |||||
EBT | $1,749 | $3,335 | ($4) | $70 | $5,150 | $16 | ($549) | ($154) | $ - | $4,463 |
Change from prior year | 31% | 19% | (56%) | 27% | 23% | N/M | (13%) | (32%) | 29% | |
EBT as a % of revenues | 22% | 87% | N/M | N/M | 42% | 37% | ||||
Net income (loss) | $4,270 | $24 | ($439) | ($147) | $ 64 | $3,772 | ||||
Change from prior year | 24% | (97%) | (16%) | (36%) | N/A | 4% | ||||
Diluted EPS | $2.43 | $0.01 | ($0.25) | ($0.08) | $0.04 | $2.15 | ||||
Change from prior year | 23% | (98%) | (14%) | (33%) | N/A | 2% | ||||
Diluted shares used | 1,757 | 1,757 | 1,757 | 1,757 | 1,757 | 1,757 | ||||
6 MONTHS - FISCAL 2012 | ||||||||||
Revenues | $6,143 | $3,162 | $311 | $9 | $9,625 | $ - | $ - | $ - | $ - | $9,625 |
Operating income (loss) | 3,772 | (102) | (487) | (117) | - | 3,066 | ||||
EBT | $1,338 | $2,808 | ($9) | $55 | 4,192 | (133) | (487) | (117) | - | 3,455 |
Discontinued operations, net of tax | - | 756 | - | - | - | 756 | ||||
Net income (loss) | 3,431 | 686 | (378) | (108) | - | 3,631 | ||||
Diluted EPS | $1.98 | $0.40 | ($0.22) | ($0.06) | $ - | $2.10 | ||||
Diluted shares used | 1,732 | 1,732 | 1,732 | 1,732 | 1,732 | 1,732 | ||||
12 MONTHS - FISCAL 2012 | ||||||||||
Revenues | $12,141 | $6,327 | $633 | $20 | $19,121 | $ - | $ - | $ - | $ - | $19,121 |
Operating income (loss) | 7,100 | (116) | (1,035) | (267) | - | 5,682 | ||||
EBT | $2,296 | $5,585 | ($15) | $168 | 8,034 | (170) | (1,035) | (267) | - | 6,562 |
Discontinued operations, net of tax | - | 777 | (1) | - | - | 776 | ||||
Net income (loss) | 6,463 | 690 | (811) | (243) | 10 | 6,109 | ||||
Diluted EPS | $3.71 | $0.40 | ($0.47) | ($0.14) | $0.01 | $3.51 | ||||
Diluted shares used | 1,741 | 1,741 | 1,741 | 1,741 | 1,741 | 1,741 | ||||
(1) | Non-GAAP reconciling items related to revenues consist primarily of nonreportable segment revenues less intersegment eliminations. Non-GAAP reconciling items related to earnings before taxes consist primarily of certain costs of equipment and services revenues, research and development expenses, sales and marketing expenses, other operating expenses and certain investment income or losses and interest expense that are not allocated to the segments for management reporting purposes; nonreportable segment results; and the elimination of intersegment profit. |
(2) | At fiscal year end, the sum of the quarterly tax provision (benefit) for each column equals the annual tax provision (benefit) for each column computed in accordance with GAAP. In interim quarters, the sum of these provisions (benefits) may not equal the total GAAP tax provision, and this difference is allocated to tax provisions (benefits) among the columns. |
N/M – Not Meaningful | |
N/A – Not Applicable | |
Sums may not equal totals due to rounding. | |
