Qualcomm Q3 2025 slides: Revenue up 10% as Automotive and IoT drive growth

Introduction & Market Context

Qualcomm Incorporated (NASDAQ:QCOM) released its third quarter fiscal 2025 earnings presentation on July 30, revealing solid growth across its business segments. The semiconductor giant reported a 10% year-over-year increase in revenue, reaching $10.4 billion, with non-GAAP earnings per share rising 19% to $2.77. Despite these positive results, Qualcomm’s stock traded at $163 in after-hours trading, up slightly by 0.57% following a 1.86% decline during regular trading hours.

The company continues to execute its diversification strategy beyond smartphones, with particularly strong performance in its automotive and IoT segments, which collectively grew 23% year-over-year. This growth comes as Qualcomm navigates a competitive semiconductor landscape and positions itself at the forefront of AI integration across various devices.

Quarterly Performance Highlights

Qualcomm reported strong financial results across all its business segments for the third quarter of fiscal 2025. Revenue reached $10.4 billion, representing a 10% increase compared to the same period last year, while non-GAAP EPS grew 19% year-over-year to $2.77.

The company’s QCT segment, which includes chipsets and licensing, posted revenues of $9.0 billion, up 11% year-over-year, with earnings before tax (EBT) increasing 22% to $2.7 billion. The QTL segment, focused on technology licensing, generated $1.3 billion in revenue, up 4% year-over-year.

As shown in the following financial results summary:

Qualcomm returned $3.8 billion to stockholders during the quarter, including $2.8 billion in share repurchases and $1.0 billion in dividends, demonstrating its commitment to shareholder returns while investing in future growth areas.

Detailed Financial Analysis

A closer examination of Qualcomm’s financial performance reveals strength across multiple product categories. Handset revenues grew 7% year-over-year to $6.3 billion, while automotive revenues increased 21% to $984 million. The IoT segment showed the strongest growth at 24%, reaching $1.7 billion in revenue.

The company’s profitability metrics also improved, with QCT’s EBT margin expanding to 30%, up 3 percentage points year-over-year. Similarly, QTL’s EBT margin increased by 1 percentage point to 71%.

The detailed financial breakdown illustrates these trends:

Comparing Q3 results against guidance, Qualcomm performed within its projected range. For the upcoming fourth quarter, the company expects revenue between $10.3 billion and $11.1 billion, with non-GAAP EPS projected between $2.75 and $2.95.

This guidance suggests continued momentum, with potential sequential growth from Q3 to Q4, though the company faces a challenging comparison to its Q2 2025 performance when it reported revenue of $10.84 billion and EPS of $2.85.

Strategic Initiatives

Qualcomm highlighted several strategic initiatives aimed at expanding its footprint beyond traditional smartphone chips. The company announced an extended collaboration with Xiaomi (OTC:XIACF), where Snapdragon 8-series platforms will power multiple generations of Xiaomi’s flagship devices with increasing volumes each year.

In the automotive sector, Qualcomm continues to gain traction with its Snapdragon Ride platform, which is set to launch in more than 20 global OEM programs in the next 18 months. The company highlighted its partnership with BMW (ETR:BMWG) for the upcoming Neue Klasse vehicles, which will include Snapdragon Ride technology.

Qualcomm also announced an agreement to acquire Alphawave Semi at an enterprise value of approximately $2.4 billion. This acquisition aims to enhance Qualcomm’s high-speed wired connectivity and compute technologies, complementing its custom Qualcomm Oryon CPU and Qualcomm Hexagon NPU processors.

In the AI space, Qualcomm demonstrated the world’s first 1 billion parameter model running locally on smart glasses, showcasing its leadership in on-device AI processing. The company unveiled the Snapdragon AR1+ Gen 1, a compact and power-efficient chipset designed for high-performance smart glasses.

Forward-Looking Statements

Looking ahead, Qualcomm provided guidance for the fourth quarter of fiscal 2025, projecting revenue between $10.3 billion and $11.1 billion and non-GAAP diluted EPS between $2.75 and $2.95. The company expects non-GAAP operating expenses to be approximately $2.35 billion.

For the full fiscal year 2025, Qualcomm anticipates GAAP diluted EPS of approximately $10.12 at the midpoint of guidance, representing a 13% increase from the $8.97 reported in fiscal 2024.

The company remains committed to returning capital to shareholders, estimating that total return of capital as a percentage of net cash provided by operating activities will be approximately 90% for fiscal 2025. As a percentage of free cash flow, this return is expected to be approximately 100%.

Qualcomm’s strategic focus on diversification beyond smartphones appears to be yielding results, with combined automotive and IoT revenues growing 23% year-over-year to $2.7 billion. These segments now represent a significant portion of the company’s business and are expected to drive future growth as Qualcomm continues to expand its presence in AI, automotive, and IoT markets.

Full presentation:

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