Q1 2024 Qualcomm Inc Earnings Call

Ladies and gentlemen, thank you for standing by.

Come to the Qualcomm first quarter fiscal year 2024 earnings conference call.

At this time all participants are in a listen only mode.

Later, well conduct a question and answer session.

I'd like to ask a question. During this time press. The Star then the number one on your telephone keypad.

To withdraw your question press the Star then the number two.

If you're using a speakerphone please pick up your handset before pressing the numbers.

Please limit your questions to one question and one follow up.

As a reminder, this conference is being recorded January 31st 2024.

The playback number for today's call is 8776606853.

International callers, please dial 20161 to 7415.

The playback reservation number is 137432 to four.

Speaker Change: I would now like to turn the call over to Mauricio Lopez Medallion, Vice President of Investor Relations.

Speaker Change: The person doing please go ahead.

Speaker Change: Today's call will include prepared remarks by Christiane them on and of course Pago wallet.

Speaker Change: In addition, Alex Rogers will join the question and answer session.

Speaker Change: You can access our earnings release and slide presentation.

Speaker Change: On our Investor Relations website.

Speaker Change: In addition, this call is being webcast on Qualcomm Dot com and a replay will be available on our website later today.

Speaker Change: 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.

Speaker Change: Actual events or results could differ materially from those projected in our forward looking statements.

Speaker Change: 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.

Speaker Change: And now to comments from Qualcomm's, President and Chief Executive Officer Christiana Mall.

Christiana Mall: Thank you Mauricio and good afternoon, everyone. Thanks for joining us today.

Christiana Mall: In fiscal Q1, we delivered non-GAAP revenues of $9 $9 billion and non-GAAP earnings per share of $2.75 above the high end of our guidance.

Christiana Mall: Revenues from our chipset business of $8 $4 billion reflect healthy enjoyed demand and continued strong momentum in automotive.

Christiana Mall: Licensing business revenues were at $1.5 billion.

Speaker Change: We're pleased with this result, and I will now share some key highlights from the business.

Speaker Change: In handsets the Snapdragon eight Gen. Three mobile platform is setting a new standard for one device G&A I experiences for premium smart phones and powers all true flagship enjoyed devices launched in launching this fiscal year.

Speaker Change: Notably the Snapdragon eight Gen. Three mobile platform for Galaxy is featured in the recently announced Samsung Galaxy S. 24 Ultra globally. In addition to the Galaxy S 24, and as 24 plus in multiple regions.

Speaker Change: The Galaxy S. 24 series includes one device AI features such as live translate interpreter chat is just night targa fee and more this marks the beginning of how gen. AI will evolve the overall smartphone experience and highlights the significant opportunity.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm First Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode.

Speaker Change: <unk> four snapdragon platforms.

Operator: Later we'll conduct a question and answer session. If you'd like to ask a question during this time, press star, then number one on your telephone keypad. To withdraw your question, press star, then number 2.

Speaker Change: We're also announcing that we extended our multiyear agreement with Samsung relating to snapdragon platforms for flagship Galaxy smartphone launches starting in 2020 for the.

Operator: If you're using a speakerphone, please pick up your handset before pressing the number or, Please limit your questions to one question and one follow-up. As a reminder, this conference is being recorded on January 31st, 2024. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 13743224. I would now like to turn the call over to Mauricio Lopez-Sedoyan, Vice President of Investor Relations. Rochelle Pesadon, please go ahead.

Speaker Change: The extended agreement demonstrates the value of Snapdragon eight our technology leadership and our successful long term strategic partnership with Samsung.

Speaker Change: In the quarter, we also announced the Snapdragon seven Gen treat mobile platform, which brings leading gen AI capabilities to high tier Android smartphones and as a category leader in both experiences and performance.

Speaker Change: In our QTL business, we're pleased to share that we recently extended several key license agreements.

Speaker Change: First Apple exercise its unilateral option to extend its global patent license agreement for an additional two years, taking the existing agreement true to March 2027.

Mauricio Lopez: Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and a slide presentation that accompanies this call on our Investor Relations website. In addition, this call was webcast on Qualcomm.com, and a replay will be available on our website later today. 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. However, actual events or results could differ materially from those projected in our forward-looking statements.

Speaker Change: Second we have renewed long term agreements with two significant Chinese smartphone Oems.

Speaker Change: In addition, we continue to negotiate new agreements or renewals with all their key licensees and Oems, including some whose coordinate agreements are set to expire in early fiscal 2025.

Speaker Change: Automotive continues to be an important pillar of our growth and diversification strategy.

Speaker Change: Notably 75, new models launched commercially in 2023 or four technologies, highlighting qualcomm's growing scale in automotive and execution of our design wins.

Speaker Change: Earlier this month at CES, we announced our collaboration with Bosch to have our Snapdragon ride Flex S. O C powered their new central vehicle computer.

Cristiano R. Amon: 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 statement. And now, comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Thank you, Mauricio, and good afternoon, everyone.

Speaker Change: As a reminder, snapdragon ride flex enables diffusion of infotainment and Adas functionality on a single SLC, enabling automakers to realize a unified central compute and software defined vehicle architecture that scales across tiers.

Cristiano R. Amon: Thanks for joining us today. In fiscal Q1, we delivered non-gap revenues of $9.9 billion and non-gap earnings per share of $2.75, above the high end of our guidance. Revenues from our chipset business of $8.4 billion reflect healthy Android demand and continuous strong momentum in the automotive business. Licensing business revenues were $1.5 billion.

Speaker Change: Additionally, we demonstrated digital cockpits connected services in advanced driver assistance enable by Gen. AI models running locally on the Snapdragon platform.

Speaker Change: This new capability can be enable on a number of existing designs via a software upgrade.

This represents significant new opportunities for Qualcomm and our partners.

Cristiano R. Amon: We're pleased with these results, and I will now share some key highlights from the business. Enhanced, The Snapdragon 8 Gen 3 mobile platform is setting a new standard for on-device Gen AI experiences for premium smartphones and powers all true flagship Android devices launched and launching this fiscal year. Notably, the Snapdragon 8 Gen 3 mobile platform for the Galaxy is featured in the recently announced Samsung Galaxy S24 Ultra globally, in addition to the Galaxy S24 and S24 Plus in multiple regions. The Galaxy S series includes on-device AI features such as Live Translate, Interpreter, Chat Assist, Nightography, and more.

Speaker Change: Mpc's, we're driving towards the launch of Snapdragon actually in mid 2024 and are pleased that our design win traction continues to increase since the platform was announced last October.

Speaker Change: We expect the snapdragon ex elite to set the industry benchmark for one device Gen AI and co pilot experiences. In addition to leading performance and battery life for next generation Windows Pcs.

Speaker Change: We recently expanded our mixed reality solutions with the announcement of the Snapdragon XR two plus Gen. Two our new platform supports 4.3 K per eye resolution at 90 frames per second and 12 or more concurrent cameras to deliver crisp immersive.

Cristiano R. Amon: This marks the beginning of how Gen AI will evolve the overall smartphone experience and highlights the significant opportunity for Snapdragon platforms. We're also announcing that we have extended a multi-year agreement with Samsung relating to Snapdragon platforms for flagship Galaxy smartphone launches starting in 2024. The extended agreement demonstrates the value of Snapdragon 8, our technology leadership, and our successful long-term strategic partnership with Samsung. In the quarter, we also announced the Snapdragon 7 Gen 3 mobile platform, which brings leading Gen AI capabilities to high-tier Android smartphones and is a category leader in both experiences and performance. In our QTL business, we're pleased to share that we recently extended several key license agreements. First, Apple exercised its unilateral option to extend its global patent license agreement for an additional two years, taking the existing agreement through to March 2027.

<unk> mixed reality and virtual reality experiences we are proud to partner with Samsung and Google to provide leading XR experiences to galaxy users by utilizing Snapdragon XR two plus gen. Two.

Speaker Change: In etch networking, we announced the Snapdragon X 35, five <unk> more than RF system. The world's first commercial release 17, five G Red cap solution the.

Speaker Change: The Snapdragon X 35 brings a new class of purpose build five G for internet of things devices.

Speaker Change: Devices powered by Snapdragon X 35 are expected to launch by the first half of 2024.

Speaker Change: We continue to believe that industrial edge devices with connectivity high performance computing and own device AI will become one of our largest addressable opportunities fueled by the secular trends of digital transformation as such we're celebrating our investments in solutions.

Speaker Change: System, and broad channel enablement to position ourselves for growth, while we navigate the industry wide inventory drawdown.

Cristiano R. Amon: Second, we have renewed long-term agreements with two significant Chinese smartphone OEMs. In addition, we continue to negotiate new agreements or renewals with other key licensees and OEMs, including some whose current agreements are set to expire in early fiscal 2025. Automotive continues to be an important pillar of our growth and diversification strategy. Notably, 75 new models launched commercially in 2023 were for technology.

Speaker Change: One key area of focus is to enable our customers to unlock the potential of Gen. AI at the enterprise using our chipset solutions as an example, zebra technologies and Toshiba recently demonstrated one device Gen AI capabilities for enterprise workflows and.

Speaker Change: Lori management at retail self checkout, respectively. Additionally, Honeywell showcase a qualcomm powered edge AI box for warehouse applications.

Cristiano R. Amon: Highlighting Qualcomm's growing scale in the automotive industry and the execution of our design work. Earlier this month at CES, we announced our collaboration with Bosch to have our Snapdragon Ride Flex SoC power their new central vehicle computer. As a reminder, Snapdragon RideFlex enables the fusion of infotainment and ADAS functionalities on a single SoC, enabling automakers to realize a unified central compute and software-defined vehicle architecture

Speaker Change: As we complete the first quarter of fiscal 'twenty four ahead of our expectations I'm very optimistic about qualcomm's trajectory and the opportunities ahead.

Speaker Change: The fundamentals of our growth drivers remain unchanged our diversification strategy is working and we're making significant progress across mobile automotive computing XR edge networking industrial Iot and more.

Speaker Change: At the upcoming mobile World Congress in Barcelona, where we'll provide an update on our seller modem and connectivity leadership as well as on our overall scale of Snapdragon Jan AI.

Cristiano R. Amon: Additionally, we demonstrated digital cockpits, connected services, and advanced driver assistance enabled by Gen AI models running locally on the Snapdragon platform. These new capabilities can be enabled on a number of existing designs via a software upgrade. This represents significant new opportunities for Qualcomm and our partners. NPCs are driving towards the launch of Snapdragon X Elite in mid-2024, and we are pleased that our design wing traction has continued to increase since the platform was announced last October. We expect Snapdragon X Elite to set the industry benchmark for on-device Gen AI and co-pilot experiences in addition to leading performance and battery life for next-generation Windows PCs. We recently expanded our mixed reality solutions with the announcement of the Snapdragon XR2 Plus Gen 2. Our new platform supports 4.3K per eye resolution at 90 frames per second and 12 or more concurrent cameras to deliver crisp, immersive mixed reality and virtual reality experiences.

Speaker Change: I would now like to turn the call over to what Kash.

Kash: Thank you Cristiano and good afternoon, everyone.

Kash: I'll start with our first fiscal quarter earnings.

Kash: We are pleased to announce strong non-GAAP results above the high end of guidance with revenues of $9 9 billion.

Kash: And EPS of $2 75.

Kash: QTL revenues of $1 5 billion and EBT margin of 74% were at the high end of guidance, reflecting slightly higher handset units.

Kash: <unk> delivered revenues of $8 4 billion and EBT margin of 31% both above the high end of guidance, reflecting strength in handsets in automotive revenues.

Kash: <unk> EBT margin included the benefit of revenue scale stronger product mix and operating discipline.

Handset revenues of $6 7 billion were higher than our prior expectations, primarily due to the increased demand driven by the acceleration of Android flagship launches with our Snapdragon eight Gen three mobile platform.

Kash: Notably, our Android handset revenues from Chinese Oems.

Kash: Exceeded our expectations of greater than 35% sequential growth.

Kash: Iot revenues of $1 1 billion to reflect the industry wide challenges we've previously outlined.

Cristiano R. Amon: We are proud to partner with Samsung and Google to provide leading XR experiences to Galaxy users by utilizing Snapdragon XR2 Plus Gen 2. At Edge Networking, we announced the Snapdragon X35 5G modem RF system, the world's first commercial Release 17 5G Red Cap solution. The Snapdragon X35 brings a new class of purpose-built 5G for Internet of Things devices.

Kash: We achieved record automotive revenues of $598 million, which grew by 12% sequentially, reflecting the increased content in new vehicle launches with our snapdragon digital chassis platform.

Kash: non-GAAP operating expenses decreased 5% sequentially to $2 1 billion and included the benefit of accelerated implementation of cost actions that we had previously outlined for the first half of fiscal 'twenty four.

Kash: Lastly, we returned $1 7 billion to stockholders during the quarter, including $784 million in stock repurchases and $895 million in dividends.

Cristiano R. Amon: Devices powered by Snapdragon X35 are expected to launch by the first half of 2024. We continue to believe that industrial-edge devices with connectivity, high-performance computing, and on-device AI will become one of our largest addressable opportunities fueled by the secular trends of digital transformation. As such, we're accelerating our investments in solutions, ecosystem, and broad channel enablement to position ourselves for growth while we navigate the industry-wide inventory drawdown. One key area of focus is to enable our customers to unlock the potential of Gen AI at the enterprise using our chipset solution. As an example, Zebra Technologies and Toshiba recently demonstrated on-device Gen-AI capabilities for enterprise workflows and inventory management at retail self-checkout, respectively.

Kash: Before turning to the second fiscal quarter guidance I'll update you on global <unk> handset units.

Kash: We estimate that global units declined by mid single digit percentage in calendar 'twenty three relative to calendar 'twenty two an improvement from our prior expectations due to the recent stabilization in demand.

Kash: For calendar 'twenty four we estimate that global handset units will be flat to slightly up on a year over year basis.

Kash: This estimate includes expected growth of high single digit to low double digit percentage in <unk> handsets.

Kash: Turning to guidance for the second fiscal quarter.

Kash: We are forecasting revenues of eight 9% to $9 7 billion and non-GAAP EPS of $2 20 to $2 40.

Kash: The sequential decline in revenues and non-GAAP EPS relative to the first fiscal quarter will be driven by seasonality for our modem only handset customer in both QTL and <unk>.

Cristiano R. Amon: Additionally, Honeywell showcased a Qualcomm-powered Edge AI box for warehouse applications. As we complete the first quarter of fiscal 24 ahead of our expectations, I'm very optimistic about Qualcomm's trajectory and the opportunities ahead. The fundamentals of our growth drivers remain unchanged, our diversification strategy is working, and we're making significant progress across mobile, automotive, computing, XR, edge networking, industrial IoT, and more. At the upcoming Mobile World Congress in Barcelona, where we'll provide an update on our Cellular Modem and Connectivity Leadership, as well as on our overall scale of Snapdragon GenAI. I would now like to turn the call over to Akash. Thank you, Cristiano, and good afternoon, everyone.

Kash: In QTL, we estimate revenues of one point to the $1 4 billion.

Kash: And EBT margins of 69% to 73%.

Kash: In <unk>, we expect revenues of seven 6% to $8 2 billion and EBT margins of 27% to 29%.

Kash: For <unk> handset revenues coming off strong performance in the first fiscal quarter, we anticipate Android revenues will be approximately flat quarter over quarter.

On a sequential basis, we expect the <unk> Iot revenues to grow by mid to high single digit percentage with <unk> automotive revenues slightly down consistent with the trend in the prior year.

Lastly, we expect non-GAAP operating expenses of approximately $2 2 billion. This reflects typical calendar year resets for certain employee related costs.

Kash: In closing, we're very pleased to start our fiscal year with strong execution and financial performance in.

Akash Palkhiwala: I'll start with our first fiscal quarter earnings. We are pleased to announce strong non-gap results above the high end of guidance with revenues of $9.9 billion and EPS of $2.75 billion. QTL revenues of $1.5 billion, an EBT margin of 74%, were at the high end of guidance, deflecting slightly higher handset use. QCT delivered revenues of $8.4 billion, an EBT margin of 31%.

Kash: In QTL as Cristiano outlined we're pleased to have extended several key license agreements we.

Kash: We do not expect any material change in QTL licensing revenue run rate as a result of these extensions.

Kash: In <unk>, our technology differentiation will accelerate with our on device Jennie O leadership and introduction of our custom Qualcomm Orion CPU.

Kash: We also remain well positioned to execute on our diversification strategy by extending our technology portfolio to deliver industry, leading products across automotive and Iot.

Akash Palkhiwala: Both are about the high end of guidance, reflecting strength in handsets and automotive revenue. QCT-EBT margin includes the benefit of revenue scale, a stronger product mix, and operating disability. Hence, our revenues of $6.7 billion were higher than our prior expectations, primarily due to increased demand driven by the acceleration of Android flagship launches with our Snapdragon 8 Gen 3 mobile platform. Notably, our Android handset revenues from Chinese OEMs exceeded our expectations of greater than 35% sequential growth. IoT revenues of $1.1 billion reflect the industry-wide challenges we previously outlined. We achieved record automotive revenues of $598 million, which grew by 12% sequentially, reflecting the increased content in new vehicle launches with our Snapdragon digital chassis platform. Non-GAAP operating expenses decreased 5% sequentially to $2.1 billion and included the benefit of the accelerated implementation of cost actions that we had previously outlined for the first half of Fiscal 24.

Kash: This concludes our prepared remarks back to you Mary Sue.

Mary Sue: Thank you.

Speaker Change: Operator, we're now ready for questions.

Speaker Change: Thank you.

Speaker Change: <unk> a question press Star then the number one two.

Speaker Change: The Australia question Press Star two.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the numbers.

Speaker Change: One moment please for the first question.

Speaker Change: The first question is from Cemig Chatterji with J P. Morgan. Please proceed with your question.

Samik Chatterjee: Hi, Thanks for taking my questions and congrats on the.

Samik Chatterjee: Results here maybe.

Samik Chatterjee: And maybe if I can start with <unk>.

Samik Chatterjee: Particularly the launch of the Samsung is 24 now you have some incremental sort of experience in terms of devices launching in the market and the performance and consumer reception, you're seeing to that so I know you outlined.

Samik Chatterjee: Adoption of <unk>, but any way of giving us some flavor of what you're thinking in terms of adoption of these.

Samik Chatterjee: Devices are AI on edge in terms of the smartphone market, how similar or different and we'll do that curve look like relative to <unk> adoption.

Akash Palkhiwala: Lastly, we returned $1.7 billion to stockholders during the quarter, including $784 million in stock repurchases and $895 million in debt. Before turning to second fiscal quarter guidance, I'll update you on global 3G, 4G, and 5G handsets. We estimate that global units declined by a mid-single-digit percentage in calendar 23 relative to calendar 22, an improvement from our prior expectations due to the recent stabilization in demand. For calendar 24, we estimate that global handset units will be flat to slightly up on a year-over-year basis. This estimate includes expected growth of high single-digit to low double-digit percentage in 5G hands-on. Turning to guidance for the second fiscal quarter. We are forecasting revenues of $8.9 to $9.7 billion and non-GAAP EPS of $2.20 to $2.40. The sequential decline in revenues and non-GAAP EPS relative to the first fiscal quarter will be driven by seasonality for a modem-only handset customer in both QTL and QCT.

Samik Chatterjee: Any insights from the sort of pipeline you are working on will.

Speaker Change: It will be helpful for us Thank you and I have a follow up.

Speaker Change: Hello, Sir Thanks for the question does this.

Cristiano: This is cristiano look.

Cristiano: It's early but I think is.

Cristiano: We're definitely excited about what we've seen the beginning it's not only unique to the <unk> 24 that has a number of now use cases running <unk> on the device I mentioned a few of my prepared remarks like like translation and you have a much more affected assistant in a number of different applications, we're going to see productivity coming but a while.

Cristiano: Also see that happening with some of our other customers from China launching a number of models. So I think we have a large number now of models being ported into our hardware for Gen. AI I think we're starting to see the beginning of new use cases reveals have been positive.

Cristiano: We are happy what we seen the results following the launch I think we need to monitor the situation, but eventually.

Akash Palkhiwala: In QTL, we estimate revenues of $1.2 to $1.4 billion and EBT margins of 69 to 73%. In QCT, we expect revenues of $7.6 to $8.2 billion and EBT margins of 27 to 29 percent. For QCT handset revenues, coming off strong performance in the first fiscal quarter, we anticipate Android revenues will be approximately flat quarter over quarter. On a sequential basis, we expect QCT IoT revenues to grow by mid to high single-digit percentage points with QCT automotive revenues slightly down, consistent with the trend in the prior year. Lastly, we expect non-GAAP operating expenses of approximately $2.2 billion.

Cristiano: At a minimum is going to have a favorable impact on mix, which is a trend that we continue to see premium and high tier with more computing power. It's Ah is the fastest growing segments in the handset market.

Speaker Change: Okay, Okay got it.

Speaker Change: Maybe just as a follow up the.

And the Android will be X customers of the Chinese Oems you work with the exceeded your expectation in the fiscal fourth quarter, but as Youre looking to the second quarter you are guiding to a more flattish trajectory here I know the industry has sort of been looking at the inventory refill from those customers as well driving some of the momentum so just.

Speaker Change: Wondering if you can give us an update in terms of what you're seeing from those customers in.

Akash Palkhiwala: This reflects typical calendar year resets for certain employee-related costs. In closing, we are very pleased to start our fiscal year with strong execution and financial performance. In QTL, as Cristiano outlined, we are pleased to have extended several key license agreements. We do not expect any material change in QTL licensing revenue run rate as a result of these extensions.

Speaker Change: If at all who are we and they are in mortgages in the market is starting to have an impact in terms of <unk>.

Speaker Change: Volume on market share for these customers as well.

Speaker Change: The context of your flat guide for them for quarter over quarter. Thank you.

Speaker Change: Sure <unk>.

As we've said previously as we entered fiscal 'twenty four our view was that Android channel inventory it largely normalized and so as we go through the year, we would typically see normal build bleed cycle around handset launches. So that's kind of the phase we are in a from our perspective.

Akash Palkhiwala: In QCT, our technology differentiation will accelerate with our on-device Gen-AI leadership and the introduction of our custom Qualcomm Orion CPU. We also remain well positioned to execute on our diversification strategy by extending our technology portfolio to deliver industry-leading products across automotive and IoT. This concludes our prepared remarks. Back to you, Mauricio.

Speaker Change: In the first quarter, what we saw was higher demand due to the acceleration of Android flagship launches with our new chip Snapdragon eight Gen. Three and we saw very strong demand across all the major Android Oems and so happy of course with that traction and that momentum.

Operator: Thank you, Kaush. Operator, we are now ready for questions. Thank you. To queue a question, press the star, then the number one.

Speaker Change: Carries over to the second quarter.

Operator: To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. One moment, please, for the first question. The first question is from Samik Chatterjee with J.P. Morgan. Please proceed with your question. Hi, thanks for taking my questions and congratulations on the results here.

Speaker Change: Well and that's our that's what you are seeing both in our results and our guide going forward.

In terms of your comment on Huawei really what we've seen since Huawei <unk> launch is that the premium tier dam in China has expanded and so we're continuing to see strong demand from our customers both of that launch.

Cristiano R. Amon: Maybe I can start with AI and particularly the launch of the Samsung S24. Now you have some incremental sort of experience in terms of devices launching in the market and the performance and consumer reception you're seeing for that. So I know you outlined the adoption of 3G and 4G, but any way of giving us some flavor of what you're thinking in terms of the adoption of these AI devices or AI on the edge in terms of the smartphone market, how similar or different will that curve look relative to 5G adoption, and any insights from the sort of pipeline you're working on will be helpful for us. Thank you, and I have a follow-up. Hello, Samik. Thanks for the question. This is Cristiano.

Speaker Change: Our next question is from the line of Matt Ramsey with Cowen. Please proceed with your question.

Thank you very much guys good afternoon.

Matt Ramsey: I guess for my first question Cristiano, it's good to hear I guess the formal.

Matt Ramsey: Announcement of an extension with your partnership with Samsung.

Matt Ramsey: And you mentioned I think in your prepared script. It started with 2024 devices, but I assume it's longer than that so maybe you could give us a little context as to.

Matt Ramsey: The links and any details you could share on the new agreement you guys. Obviously have your new custom Cpus coming into the Snapdragon roadmap and some expanded MCU product as well so.

Matt Ramsey: We see kind of what the split is a share in the flagship at Samsung currently, but I'm just trying to understand a bit more about what this means for us on a go forward basis.

Cristiano R. Amon: Look, it's early, but I think we're definitely excited about what we've seen in the beginning. It's not only unique to the Galaxy S24, which has a number of now use cases running GNI on the device. I mentioned a few of my prepared remarks, like translation, and you have a much more effective assistant in a number of different applications. We're going to see productivity come, but we'll also see that happening with some of our other customers in China, launching a number of models. I think we have a large number of models now being ported into our hardware for GNI, and I think we're starting to see the beginning of new use cases. Reviews have been positive, and we are happy with what we've seen, the results following the launch.

Speaker Change: Thanks for the question Matt.

Speaker Change: <unk>.

Speaker Change: The agreement that we that we announced at this earnings call. It is a multi year agreement.

Speaker Change: We're not disclosing the duration, but there are several years into that agreement and I think your.

Speaker Change: <unk> is correct I think they'll start to 2024 I think as you look at the launch of the <unk>.

Speaker Change: <unk> 24 is a good proxy on how we should think about.

Speaker Change: The agreement between Us and Samsung, but most important is to think that you outline our roadmaps getting stronger over time.

Speaker Change: Especially with our custom CPU coming to mobile and we're aiming to have the leadership position in the mobile performance on CPU.

Akash Palkhiwala: I think we need to monitor the situation, but eventually, at a minimum, it's going to have a favorable impact on mix, which is a trend that we continue to see with premium and high-tier notebooks with more computing power. It's the fastest growing segment in the handset market, and maybe just as a follow-up, the And the Android OVX customers of the Chinese OEMs you work with exceeded your expectations in the fiscal first quarter. But as you're looking to the second quarter, you get to a more flattish trajectory here.

Speaker Change: And our NPA you continue to expand as we are as I mentioned before we're just at the beginning of the Genie energy transition I think in summary, we're very pleased with our relationship with Samsung and it's a very long term relationship with this customer.

Speaker Change: Got it no. Thank you for that I guess my follow up question.

Speaker Change: One for our cost sharing first of all congratulations on the new CLO.

Speaker Change: Hum.

Speaker Change: All done.

Speaker Change: But my question is around margins and I noticed.

Cost Sharing: Even with the Iot business down dramatically there was some improvement in sequential gross margin in the quarter and and are back above 30% in Q T. Operating margin. So maybe you could discuss some of the moving parts with margins in the business because it was a pleasantly a bit better than.

Akash Palkhiwala: I know the industry has sort of been looking for an inventory replenishment from those customers as well, driving some of the momentum. So just wondering if you can give us an update in terms of what you're seeing from those customers and if at all Huawei and their emerging presence in the market are starting to have an impact in terms of volume or market share for these customers as well, in the context of your flat guide for them for quarter over quarter. Thank you. Sure, Samik and Akash.

Cost Sharing: I had modeled and I kind of want to see what might be sustainable or what actions you took on a go forward basis on both the gross and the operating side. Thanks.

Speaker Change: Thank you, Matt and thanks for your wishes I'm looking forward in this new role to working with <unk>.

Akash Palkhiwala: As we've said previously, as we entered Fiscal 24, our view was that Android channel inventory had largely normalized. And so as we go through the year, we typically see a normal build-bleed cycle around handset launches. So that's kind of the phase we are in from our perspective.

Speaker Change: Christian on the executive team to do.

Speaker Change: To kind of deliver on our long term priorities and of course I'll continue to.

Speaker Change: We remain committed to my CFO role working closely with the team here and maintaining consistency and transparency and looking forward to seeing a lot of you at upcoming events.

Akash Palkhiwala: In the first quarter, what we saw was higher demand due to the acceleration of Android flagship launches with our new chip, Snapdragon 8 Gen 3. And we saw very strong demand across all the major Android OEMs. And we are so happy, of course, with that traction, and that momentum carries over to the second quarter, as well.

Speaker Change: On the margin side.

Speaker Change: What you saw in the first quarter is really the fact that our gross margins were stronger because the mix was richer we had a higher set of premium tier launches coming through in that.

Speaker Change: Impacted our volume and we benefited from that mix richer mix and if you look at our second quarter Guide we are guarding guiding largely in line with how our first quarter came in so that was that was obviously great to see.

Akash Palkhiwala: And that's what you're seeing both in our results and our guide going forward. In terms of your comment on Huawei, really, what we've seen since the Huawei 5G launch is that the premium tier TAM in China has expanded. And so we're continuing to see strong demand from our customers post that launch. Our next question is from the line of Matt Ramsey with Callen.

Speaker Change: From an operating margin perspective.

Speaker Change: In addition to the strength in the gross margins, obviously, the revenue scale and the actions. We took on the Opex also benefited and so we were happy to extremely happy to deliver 31% operating margin in <unk>.

Cristiano R. Amon: Please proceed with your question. Thank you very much, guys. Good afternoon. I guess for my first question... Cristiano, here.

Speaker Change: And really focused on delivering to the long term target we've outlined to the investors.

Speaker Change: Our next question is from the line of Mike Walkley with Canaccord Genuity. Please proceed with your question.

Cristiano R. Amon: Announcement of an extension with your partnership with SAMHSA, and you mentioned, I think, in your prepared script that it started with 2024 devices, but I assume it's longer than that, so maybe if you give us a little context as to the links and the details you can share on the new agreement. You guys obviously have your new custom CPUs coming into the Snapdragon roadmap and some expanded MPU products as well. We see kind of what the split is of share in the flagship at Samsung currently, trying to understand a bit more about what this means for on a go. Thanks for the question, Matt. The agreement that we announced at this earnings call is a multi-year agreement. We're not disclosing the duration, but there are several years in that agreement, and I think your observation is correct. I think that it starts in 2024.

Mike Walkley: Great. Thanks for taking my question congrats on extending some of the licensing deal I guess just wanted to jump a little bit into the Iot business. The three segments I think consumers still weaker but can you update us kind of how the inventory bleed is trending for the three businesses within Iot and then yes.

Speaker Change: Within that question too just on the recovery of Iot can you share with us the extra leap ramp and how material this might become for Iot say in the next one to two years.

Speaker Change: Yeah.

Speaker Change: Maybe I'll address the first part and then Cristiano can talk through the ex elite question.

Speaker Change: From an Iot inventory perspective.

Speaker Change: What what we've seen is stabilization really on the consumer side. As you know we were one of the first to call out the weakness in Iot and now we're seeing it go through both on the industrial and the edge networking side.

Cristiano: And consistent with our previous comments, we think the fourth quarter was a was the bottom for our Iot revenue stream, we're guiding second quarter up mid to high single digits.

Cristiano R. Amon: I think you should look at the launch of the Galaxy S24 as a good proxy and how you should think about the agreement between us and Samsung. The most important thing is the thing that you outlined. Our roadmap is getting stronger over time, especially with our custom CPU coming to mobile, and we're aiming to have the leadership position in mobile performance on CPUs, and our NPU continues to expand. As I mentioned before, we're just at the beginning of the GNI transition. I think, in summary, we're very pleased with our relationship with Samsung, and it's a very long-term relationship with this customer. Now, thank you for that. I guess my follow-up question is... one for Akash. I mean, first of all, Akash, congratulations on the O.O. Hat.

Cristiano: Second half of the year fiscal year as we see the inventory channel kind of normalizing end markets kind of benefiting from that.

Cristiano: We're excited about what our product portfolio can bring and overall lots of opportunities for us there. So.

Cristiano: In my mind, there is significant uncertainty, but we are cautiously optimistic and I think we have a great product portfolio as we look forward.

Cristiano: Look your question about actually and in PC.

Cristiano: Too early we're tracking to the launch of products with this chipset.

Cristiano: Tight with the next version of Microsoft Windows, There has a lot of the windows AI capabilities.

Cristiano: We're still maintaining the same date, which is driven by windows, which is mid 2020 for getting ready for back to school.

Akash Palkhiwala: Well done. But my question is around margins. And I noticed that even with the IOT business down dramatically, there was some improvement in the quench of gross margin in the quarter. I'm back above 30.

What we're excited about it since we announced that Ed Tech summit, showing the performance of the product and they add capabilities design traction continued to increase so we had to increase the number of design since last quarter and we continue to March forward towards the launch we liked that everybody is now talking about our own device AI on PC that's what.

Akash Palkhiwala: Operating Margins, and Margins in the business, I'm pleasantly a bit better than I had modeled, and I kind of want to see what might be sustainable or what actions you took on a go-forward basis on both the gross and the opposite. Thank you, Matt, and thanks for our wishes. I'm looking forward, in this new role, to working with Christian and the executive team to deliver on our long-term priorities. And, of course, I'll continue to remain committed to my CFO role, working closely with the team here and maintaining consistency and transparency, and looking forward to seeing a lot of you at upcoming events. On the margin side, what you saw in the first quarter was really the fact that our gross margins were stronger because the mix was richer.

Cristiano: We started this journey with <unk> and I think that proves to be a tailwind to the opportunity for us in Pcs.

Speaker Change: Alright. Thanks.

Speaker Change: Just a quick follow on question on the auto business, how should we think about the ramp of that business over the next one to two years, you've talked about a lot of design win activity in digital tests.

Speaker Change: Ramping this year, but with Adas coming into the model and how might that business ramp towards your target in 2026.

Speaker Change: No absolutely. Thank you for your question look let me step back a little bit and say, we're extremely pleased with our performance in alto, especially when you look at the overall market right now when you look at Qualcomm results with record revenues and very.

Akash Palkhiwala: We had a higher set of premium tier launches coming through, and that impacted our volume, and we benefited from that richer mix. And if you look at our second quarter guide, we are guiding largely in line with how our first quarter did, so that was obviously great to see.

Speaker Change: Strong I think year over year growth.

Speaker Change: In 2023, and this year to just close we we launched 75 models with our silicon with significant improved improvement in silicon content as it relates to those immersive cockpit and in many cases a processing for safety. So we're very happy with that business and I think the answer to your question is.

Akash Palkhiwala: From an operating margin perspective, in addition to the strength in the gross margins, obviously, the revenue scale and the actions we took on the OPEX also benefited. And so we are extremely happy to deliver 31% operating margin in QCT and really focused on delivering to the long-term target we've outlined to the investors. Our next question is from the line of Mike Walkley with Kanicord Genuity. Please proceed with your question.

Speaker Change: We are on track.

Speaker Change: To meet our targets that we set on the hour to Investor day of 4 billion and $9 billion, respectively. I think for 26 at the end of the decade.

Speaker Change: So we're on track for that and.

Speaker Change: The next quarter, we're going to give you an update on the design win pipeline that continues to grow.

Cristiano R. Amon: Thanks for taking my question and congrats on extending some of the licensing deals. I guess I just want to jump a little bit into the IoT business, you know, the three segments. I've seen consumers still weaker, but can you give us kind of how the inventory bleed is trending for the three businesses within IoT? And then, you know, within that question too, just on the recovery of IoT, can you share with us the XLE ramp and how material this might become for IoT, say, in the next one to two years? Maybe I'll address the first part, and then Cristiano can talk through the ex-elite question.

Speaker Change: Our next question comes from Stacy <unk> with Bernstein Research. Please proceed with your question.

Stacy: Hi, guys. Thanks for taking my questions. So given that you've got Android New Android was pretty strong in December and its flat into March.

Stacy: How are you thinking about June seasonality, given given all of these things.

Stacy: Trends in moving pieces I know, it's usually down a bit from March but I guess in the current environment. How are you thinking about given seasonality.

Akash Palkhiwala: From an IoT inventory perspective, what we've seen is stabilization really on the consumer side. As you know, we were one of the first to call out the weakness in IoT, and now we're seeing it go through both on the industrial and the edge networking side. And consistent with our previous comments, we think the first quarter was the bottom for our IoT revenue stream, and we're guiding the second quarter up mid to high single digits.

Akash: Stacy it's akash.

Stacy: No change to the shape of the year comments that we made last time following second quarter. We do we do expect third quarter to be the lowest quarter. It's one of the quarters, where we do not have any significant flagship launches and as a result, you're going to see a decline in third quarter, then growth back into the fourth quarter and it's when you look at <unk>.

Stacy: Second to third quarter, we expect a trend consistent with the last two years.

Cristiano R. Amon: Second half of the year, fiscal year, as we see the inventory channel kind of normalizing and markets kind of benefiting from that, we're excited about what our product portfolio can bring and overall, lots of opportunities for us there. So in my mind, there's significant uncertainty, but we are cautiously optimistic, and I think we have a great product portfolio as we look forward. Look, your question about xElite on PC. You know, it's too early.

Stacy: First half obviously benefited from this acceleration of launches for Android and.

Stacy: Pretty happy with that and I think it sets us up as we look forward in terms of both content growth with our strong roadmap and just positioning overall and the handset market.

Speaker Change: And so my follow up.

Speaker Change: I wanted to ask about the Huawei is while it was while we still completely out of the bottle in December and is it out of the bottle and the March guidance.

Speaker Change: Yes, so as we've said in the past Stacy we do have a <unk> license to ship to Huawei and so we've continued to ship based on customer demand, but as you are aware they have launched a <unk> device with their own chip and that's that's I think the priority going forward.

Cristiano R. Amon: We're tracking to the launch of products with this chipset, tied to the next version of Microsoft Windows. They have a lot of Windows AI capabilities. We're still maintaining the same date, which is driven by Windows, which is mid-2024, getting ready for back to school. What we're excited about is that since we announced that at Tech Summit, showing the performance of the product and the AI capabilities, design traction has continued to increase. So we have increased the number of designs since last quarter, and we continue to march forward towards the launch. We like that everybody's now talking about on-device AI on PCs.

Speaker Change: Our next question is from the line of Chris Caso with Wolfe Research. Please proceed with your question.

Chris Caso: Yes. Thank you I guess just a question on QTL.

Chris Caso: And coming from your comments about the global handset market. It sounds like Youre, a little more optimistic on the <unk> market on the year QTL revenues been kind of stuck in this range.

Speaker Change: Because of handset.

Cristiano R. Amon: That's where we started this journey with xElite, and I think that will prove to be a tailwind to the opportunity for us in PC. Great, thanks.

Chris Caso: Handset units have been due.

Chris Caso: I guess, what's the outlook for QTL going forward in the context of what Youre expecting for the handset market overall.

Cristiano R. Amon: Maybe, Cristiano, just a quick follow-on question. Just on the auto business, how should we think about the ramp of that business over the next one to two years? You've talked about a lot of design activity and digital chassis ramping this year, but with ADAS coming into the model, how might that business ramp towards your target in 2026? Absolutely.

Chris Caso: Yes, so as we outlined for a handset market. When you look at calendar 'twenty four overall market, we expect it to be flat to slightly up.

Chris Caso: But within that five day, obviously is our target market, especially for the chip business, we expect that to be high single digit to low double digit up on a year over year basis.

Chris Caso: Within QTL.

Chris Caso: We will stick with the guidance, we have given before we think theres a scale to the business that's aligned with dance at market and and the two will move in line.

Cristiano R. Amon: Thank you for your question. Look, let me step back a little bit and say we're extremely pleased with our performance in Alto, especially when you look at the overall market right now, and you look at Qualcomm's results with record revenues and very strong, I think, year-over-year growth. In 2023, and this year to just close, we launched 75 models with our silicon with significant improvements in silicon content as relates to the immersive cockpit, and in many cases, processing for safety. So we're very happy with the business. And I think the answer to your question is, we're on track to meet our targets that we set on Alto Investor Day of $4 billion and $9 billion, respectively, for 2026 and the end of the decade. So we're on track for that.

Chris Caso: And then on the extensions of the license I just wanted to make sure that I said this in my prepared remarks, but just to confirm.

Chris Caso: As a result of the extension, we do not expect any material change in our acuity licensing revenue run rate. So it is consistent with the program.

QTL licensing revenue run rate it is consistent with the program.

Chris Caso: Right.

Helpful. Thank you.

Chris Caso: As a follow up Kristina I was wondering if you could speak to.

Kristina: Sort of the decision too.

Kristina: To re engage in custom kors with Ryan.

Kristina: And what what outcome you expect of that I mean, it sounds like that's been.

One of the reasons or one of the things behind the renewal of the Samsung agreement, what sort of changed in the market because Qualcomm did custom cores in the past.

Akash Palkhiwala: And, The next quarter, we're going to give you an update on the DesignWin pipeline, which continues to grow. Our next question comes from Stacy Rasgon with Bernstein Research. Please take your question. Hi guys, thanks for taking my questions.

Kristina: And what do you expect to get out of that in terms of market share and content and such.

Kristina: Yeah.

Speaker Change: Thank you Chris for your question look it's consistent I think with the strategy. We outlined I think following the acquisition of new here in the past Qualcomm has been designing now it's shown custom course, and I think the first instantiation of that was for Pcs.

Akash Palkhiwala: So given that you've got Android, you know, Android was pretty strong in December and it's flattened to March. How are you thinking about June seasonality, given all these trends and moving pieces? I know it's usually down a bit from March, but I guess in the current environment, how are you thinking about June seasonality? Stacey, it's Akash.

Speaker Change: If you if you remember in the past that was the key motivation as we embark on this journey to create a leading <unk> for laptops for the windows ecosystem, we needed to have the performance leadership and we needed to design our own CPU to to deliver the results that we did with <unk> elite now.

Akash Palkhiwala: No change to the shape of the year comments that we made last time. However, following the second quarter, we do expect the third quarter to be the lowest quarter. It's one of the quarters where we do not have any significant flagship launches. And as a result, you kind of see a decline in the third quarter, then growth back into the fourth quarter. And when you look at the second to third quarter, we expect a trend consistent with the last two years. Our staff has obviously benefited from this acceleration of launches for Android, and they are pretty happy with that. And I think it sets us up as we look forward in terms of both content growth with our strong roadmap and just positioning overall in the handset market. Thank you. And for my follow-up question, I just want to ask about Huawei. Was Huawei still completely out of the picture in December? And is it out of the model in the March guide? Yes, as we've said in the past, Stacy, we do have a 4G license to ship to Huawei.

Speaker Change: We're taking that across the entire roadmap. Your observation is correct as we take that into mobile next we're seeing significant interest from our partners is truly becomes a leadership position in the marketplace now across all of course, not only graphics and AI, but also CPU.

Speaker Change: And we're not stopping there following smartphone is going to go into our automotive business and we're excited about what the team has accomplished to date well Ryan is really well positioned to be the leading CPU core in the industry.

Speaker Change: Our next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

Timothy Michael Arcuri: Thanks, a lot can you talk about restocking in China, It looks like the China Android.

Timothy Michael Arcuri: Uh huh.

Timothy Michael Arcuri: Obviously, it was up a ton and it's being guided flat your peer was a bit cautious on this can.

Akash Palkhiwala: And so we've continued to ship based on customer demand. But, as you know, they have launched a 5G device with their own chip. And that's, that's, I think, the priority going forward. Our next question is from the line of Chris Caso with Wolf Research. Please proceed with your question.

Timothy Michael Arcuri: Can you talk to you do you think youre shipping to consumption and do you think youre going to ship to consumption through the rest of the year and then I had another question.

Speaker Change: Yes, Tim consistent with what I said earlier in the call I think we are kind of largely at normalized inventory for Android entering the fiscal year.

Akash Palkhiwala: And coming from your comments about the global handset market, it sounds like you're a little more optimistic about the 5g market this year. However, QTL revenue has been kind of stuck in this range. Because you know, where handset units have been due is, I guess, what's the outlook for QTL going forward in the context of what you're expecting for the handset market over the next couple of years? Yeah, so as we outlined for the handset market, when you look at calendar 24, the overall market, we expect it to be flat to slightly up. But within that, 5G obviously is our target market, especially for the chip business. We expect that to be high single-digit to low double-digit higher on a year over year basis. Within QTL, we'll stick with the guidance we have given before.

Tim: What you saw in the December quarter at least for us to a large extent was a build for the various premium tier launches that happened during the period.

Tim: So we do expect normal build bleep cycles through the year as as devices launch, but that's that's kind of the framework with which we are operating going forward.

Speaker Change: Got it and then now that you have the modem for longer for this one flagship customer one could envision a scenario, where maybe you can leverage that into some new RF content that you said that you have not had in the past.

Speaker Change: Is this a scenario I mean, it seems like it could add $1 billion, maybe I mean, you were sort of running $2 billion to $4 billion a year on year, our FSP business prior to stopping to tell us what that is so it seems like that is something that you could potentially leverage the.

Speaker Change: Reliance on your modem business. Thanks.

Speaker Change: Yes, Tim.

Akash Palkhiwala: We think there's a scale to the business that's aligned with the handset market, and the two will move in line. And then on the extensions of the licenses, I just wanted to make sure that, I said this in my prepared remarks, but just to confirm, as a result of the extension, we do not expect any material change in our QCT licensing revenue run rate, so it's consistent with the program, and the QTL licensing revenue run rate is consistent with the program. That's helpful.

Speaker Change: I'd say, that's a conversation obviously that.

Speaker Change: We will talk to the customer about it's a part of our portfolio and we'll make it available if they're interested.

Speaker Change: Our next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.

Ross Seymore: Hi, guys. Thanks for asking a couple questions and congrats on the COO role, but the first one is on the Opex side of things you guys did a great job in the calendar fourth quarter and you gave the guidance for the fiscal first our fiscal second quarter, how should we think about that for the remainder of the year given your commentary on kind of doubling down on some of the opportunity opportunist.

Cristiano R. Amon: Thank you. As a follow-up, Cristiano, I wonder if you could speak to, you know, sort of the decision to, you know, re-engage in custom cores with Orion and, you know, what outcome you expect of that.

Ross Seymore: <unk> investments to diversify the company Nucor is et cetera.

Yeah Ross Thanks, Thank you very much.

Speaker Change: From an opex perspective, really the way, we think about it as any hiring that we do will be very selective and focused on really acquiring new skills that are required for diversification, but other than that we've gone through a reduction recently, we think we're at at.

Cristiano R. Amon: I mean, it sounds like, you know, that's been, you know, one of the reasons or one of the things behind the renewal of the Samsung agreement. You know, what sort of change in the market will happen because Qualcomm did custom cores in the past, and you know, what do you expect to get out of that in terms of market share and content? Thank you, Chris, for a question. Look, it's consistent, I think, with the strategy we outlined, I think, following the acquisition of Nuvia in the past. Qualcomm has been designing now its own custom cores, and I think the first instantiation of that was for PCs.

Speaker Change: At scale to a large extent and we're committed to operating discipline.

Speaker Change: Okay, and I guess for my follow up I noticed in the 10-Q, you had a new 10% customer I think it was a 14% customer I don't expect you to name who that is but is that a.

Speaker Change: A reflection of the strong China demand that you talked about in the continuation of a good future growth opportunities or was there any one time aspect of that customer whoever it may be popping up in the quarter.

Speaker Change: I think the way you framed it in your first tier is a reasonable way of thinking about it.

Cristiano R. Amon: Actually, if you remember in the past, that was the key motivation as we embarked on this journey to create a leading SoC for laptops, for the Windows ecosystem. We needed to have performance leadership, and we needed to design our own CPU to deliver the results that we did with XElite. Now we're taking that across the entire roadmap.

Speaker Change: Our next question is coming from the line of Tom O'malley with Barclays. Please proceed with your question.

Tom O'malley: Hi, Thanks for taking my question, then just passing on my congratulations as well.

Tom O'malley: Just wanted to ask on the ASP side for Android, you're obviously kind of characterizing a market that's flattish into March and kind of the bottom in June and then improving from there, but you benefited from some some good mix and the beginning of the fiscal year here could you talk about what you would expect from a mixed perspective as you go into the back half what are you seeing the same.

Cristiano R. Amon: As we take that into mobile next, we're seeing significant interest from our partners as this truly becomes a leadership position in the marketplace now across all cores, not only graphics and AI, but also CPU. And we're not stopping there. The following smartphone is going to go into our automotive business, and we're excited about what the team has accomplished to date. Orion is really well positioned to be the leading CPU core in the industry. Our next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. Thanks a lot.

Tom O'malley: Kind of strengthened on the ASP side that you've kind of seen over the past year that'd be really helpful to understand thank you.

Speaker Change: Yes, so if you think about premium flattened.

Speaker Change: Premium flagship launches for our Oems a lot of the.

Speaker Change: Launches happen in the holiday timeframe, just before the holidays going into Chinese new year as well.

Speaker Change: And so you've seen a lot of those happen we do have some significant launches through the middle of the year, but obviously the next big launch goes into the holiday season, starting with Apple and then going into the Android launches.

Speaker Change: So that's the typical cadence now when it wasn't just to confirm that's just the premium tier we are talking about of course, there are other tiers and including the high tier where we have very significant presence and that does drive a significant portion of our the launches that happened through the year and also our revenue base.

Akash Palkhiwala: Um, can you talk about restocking in China? It looks like the Chinese Android, you know, obviously was up a ton. And it's, you know, being, you know, guided flat. Your peer was a bit cautious on this. Can you talk to you?

Speaker Change: Helpful. And then just on the auto business, you've clearly seen some weaker data points just the ecosystem can you explain why your auto business may not be levered to some of the Adas areas, where you've seen that particular weakness of late and like when do those eight Allison.

Akash Palkhiwala: Do you think you're shipping that for consumption? And do you think you're going to ship it for consumption through the rest of the year? And then I had another question.

Akash Palkhiwala: Yeah, Tim, consistent with what I said earlier in the call, I think we're kind of largely at normalized inventory for Android entering the fiscal year. What you saw in the December quarter, at least for us, was, to a large extent, a build for the various premium tier launches that happened during the period. And so we do expect normal build-bleed cycles through the year as devices launch. But that's kind of the framework with which we are operating going forward. Got it. And then now that you have the modem for longer for this one flagship customer, one can imagine a scenario where maybe you can leverage that into some new RF content that you have not had in the past. Is this a scenario?

Speaker Change: When start layering on is that more like a 25 story for you guys or 'twenty six just could you talk about the pipeline and when you see those.

Speaker Change: More advanced wind kind of layering into the revenue stream. Thank you.

Speaker Change: Hi, This is cristiano look.

Cristiano: The automotive story of Qualcomm is primarily driven by share gains as models with our silicon part of our pipeline started to materialize into revenue and the way you should think about it historically a lot of the revenue was telematics now youll see the largest component being a lot of the fully emerge.

Cristiano: <unk> digital cockpits on the car and we already have some revenue from <unk> processing you see a lot of cars for example in China with both a desk and autonomy with our processor youll see some of our customers in the United States over a processor and I think that continues to.

Akash Palkhiwala: I mean, it seems like it could add a billion dollars, maybe. I mean, you were sort of running to $4 billion a year in your RFFE business prior to, you know, stopping to tell us what that is. So it seems like that is something you could potentially leverage your, you know, reliance on your modem business. Yeah, Tim, I'd say that's a conversation, obviously, that we will talk to the customer about it. It's a part of our portfolio, and we'll make it available if they're interested. Our next question is from Ross Seymour with Deutsche Bank. Please proceed with your question.

Cristiano: Grow.

Cristiano: As we get towards our 2026 revenue target, you're probably going to see very healthy components of all of those elements.

Speaker Change: Thank you.

Speaker Change: Our final question is from the line of Polyone with Bank of America. Please proceed with your question.

Akash Palkhiwala: Hi guys, thanks for asking a couple questions and, Akash, congrats on the COO role. The first one is on the OPEC side of things; you guys did a great job in the calendar fourth quarter, and you gave the guidance for the fiscal first or fiscal second quarter. How should we think about that for the remainder of the year, given your commentary on kind of doubling down on some of the opportunistic investments to diversify the company, new cores, etc.? Ross, thank you very much.

Speaker Change: Hi.

Polyone: I have two follow ups on the answers questions you had before.

Polyone: First one is Samsung.

Polyone: Yes.

Polyone: Contract on the other hand Samsung.

Polyone: Zero.

Polyone: In 'twenty four 'twenty three so.

Polyone: Are you expecting revenue from Samsung to go up or down 24%.

Polyone: What are your expectations of share losses.

Speaker Change: Can you frame it for us.

Speaker Change: The second question is on the auto business.

Speaker Change: You had a phenomenal quarter.

Speaker Change: Very different from the other auto companies most other auto companies had weakness.

Akash Palkhiwala: From an OPEX perspective, really, the way we think about it is any hiring that we do will be very selective and focused on really acquiring new skills that are required for diversification. But other than that, we've gone through a reduction recently. We think we're at scale to a large extent, and we're committed to operating this way. And I guess for my follow-up, I noticed in the 10Q you had a new 10% customer; I think it was a 14% customer. I don't expect you to name who that is. But is that a reflection of this strong Chinese demand that you talked about in the continuation of good future growth opportunities? Or was there any one-time aspect of that customer, whoever it may be, popping up in the quarter? I think the way you framed it in your first theory is a reasonable way of thinking.

Speaker Change: What is its strength related.

Speaker Change: Related to <unk>.

Speaker Change: Share gain with certain customers.

Speaker Change: <unk> four can you just put some color on the strength relative strength versus the other thanks.

Speaker Change: Yeah Tal it's it's.

Four: So on this on Samsung and this was conversation about the premium tier I assume in <unk> 'twenty three we did have global share.

Four: In the G 24 that just launched in consistent with what we had said on the last quarter. We expect to have a majority share based on the model split between us and <unk>.

Four: As <unk> indicated in his prepared remarks, what one of the benefits of the agreement that we did with them is it gives us predictability on our position within the premium tier going forward and then from a content perspective, there's clearly content expansion happening and this is really when you look at our premium tier roadmap not.

Akash Palkhiwala: Our next question is coming from the line of Tom O'Malley with Barclays. Please proceed with your question. Hi, thanks for taking the question and just passing on my congratulations to Akash as well.

Four: With Jenny I coming in our custom custom CPU cores coming in as well, but then also across other technologies as consumers demand more capability, we see our content on our ESP both continue to grow.

Akash Palkhiwala: I just wanted to ask on the ASP side for Android, you're obviously kind of characterizing a market that's flattish into March, kind of the bottom in June and then improving from there, but you've benefited from some good mix in the beginning of the fiscal year here. Could you talk about what you would expect from a mixed perspective as you go to the back half? Would you see the same kind of strength on the ASP side that you've kind of seen over the past year? That'd be really helpful to understand.

Four: Switching over to your second question on automotive you should really think the way to think about our automotive businesses were tied to the launch of new cars clearly the industry is going through a transformation digitization of cars and we are right at the intersection of that transformation, where we're benefiting as cars put in more infotainment content.

Four: For experience within the car more Adas content comes into the car as well and and really we get to benefit from all of those intersection points in the car and we are increasing the content as new cars loans. So that's that's the maybe the disconnect between some of our peers, what they're seeing and what we're seeing.

Akash Palkhiwala: Thank you. Yeah, so if you think about premium flagship launches for our OEMs, a lot of the launches happen in the holiday timeframe just before the holidays going into Chinese New Year as well. And so you've seen a lot of those happen. We do have some significant launches through the middle of the year, but obviously, the next big launch goes into the holiday season, starting with Apple, and then going into the Android launches. So that's the typical cadence.

Four: Stepping back I mean, clearly this is an this is an industry that's going through some short term dynamics. So we will be closely monitoring it but when you step back our technology our position of our products look really good and we're excited about where we're going.

Akash Palkhiwala: Now, just to confirm, that's just the premium tier we're talking about? Of course, there are other tiers, including the high tier, where we have a very significant presence. And that does drive a significant portion of the launches that happen through the year and also our revenue, Helpful. And then just on the auto business, you've clearly seen some weaker data points just out of the ecosystem. Can you explain why your auto business may not be leveraged to some of the ADAS areas where you've seen the particular weakness of late? And when do those ADAS and, you know, winds start layering on? Is that more of like a 25 story for you guys? Or 26?

Speaker Change: Thank you.

Mr. Han: That concludes today's question and answer session. Mr. Han do you have anything further to add before joining the call.

Mr. Han: Yes.

Han: Just in closing I'd, just like to remind everyone look where.

Han: As I said, we're happy with the quarter, we see the Android market stabilizing after we've been to 'twenty. Three there was a year of correction. We like are the transition of our user experience with <unk> that could create an opportunity mobile.

Han: This is one of one of those times for Qualcomm there both for Apple and Samsung revenue on the chip side or.

Han: Or under contract, we're very happy about that we continue to move towards stability of the QTL revenue stream with those new agreements.

Cristiano R. Amon: Just can you talk about the pipeline and when you see those, you know, more advanced winds kind of layering into the revenue stream? Thank you. Hi, this is Cristiano. Look, um...

Han: As you look at the growth opportunity I think the alto results speak for itself.

Now in the Iot segment, we're really focused on the launch of ex elite in the PC, We announced a new product for XR and if you believe that that that market is finally going to get very large scale, we're well positioned with.

Han: With a partnership with meta as well as Samsung, Google and as Iot, especially industrial goes to the correction, we expect that to resume growth. So we're focused on what we can control are busy at work or the growth and diversification of the company and I want to say a big Thank you for all of our partners and employees.

Han: Help us get to this quarter. Thank you very much and I talked to you all next quarter.

Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.

Speaker Change: Yes.

Cristiano R. Amon: The automotive story of Qualcomm is primarily driven by share gains, as models with our silicon part of our pipeline started to materialize into revenue. And the way you should think about it, historically, a lot of the revenue was telematics. Now you see the largest component being a lot of fully immersive digital cockpits on the car. And we already have some revenue from ADAS processing. You see a lot of cars, for example, in China with both ADAS and autonomy.

Cristiano R. Amon: With our processor, you see some of our customers in the United States using our processor. And I think that continues to grow as we get towards our 2026 revenue target. You're probably going to see very healthy components of all of those elements.

Cristiano R. Amon: Thank you. Our final question is from Milena Tal Liani with Bank of America......Prada. Hall.

Akash Palkhiwala: Yeah, Tal, it's Akash. So on this, on Samsung, and this is a conversation about the premium tier, I assume. In GS23, we did have global share. In the GS24 that just launched, and consistent with what we said in the last quarter, we expect to have a majority share based on the model split between us and X. As Cristiano indicated in his prepared remarks, one of the benefits of the agreement that we did with them is that it gives us predictability on our position within the premium tier going forward. And then from a content perspective, there's clearly content expansion happening. And this is really when you look at our premium tier roadmap, not just with Gen AI coming in, our custom CPU cores coming in as well, but then also across other technologies.

Akash Palkhiwala: As consumers demand more capability, we see our content and our ASP both continue to grow. Switching over to your second question on cars, the way to think about our automotive business is that we're tied to the launch of new cars. Clearly, the industry is going through a transformation, the digitization of cars, and we are right at the intersection of that transformation. We're benefiting as cars put in more infotainment content for the experience within the car, and more ADAS content comes into the car as well. And really, we get to benefit from all those intersection points in the car, and we're increasing the content as new cars launch. So that's maybe the disconnect between some of our peers, what they're seeing and what we're seeing.

Akash Palkhiwala: Stepping back, I mean clearly, this is an industry that's going through some shorter-term dynamics, so we'll be closely monitoring it, but when you step back, our technology, our position, our products look really good, and we're excited about where we're going. Thank you. That concludes today's question and answer session. Mr. Ramon, do you have anything further to add before adjourning the call?

Cristiano R. Amon: Yes, just in closing, I'd just like to remind everyone, look, we're, as I said, we're happy with the quarter, we see the Android market stabilizing after we've been to 23, there was a year of correction. We like the transition of user experience with Gen AI that could create an opportunity for mobile. This is one of those times for Qualcomm; they're both for Apple and Samsung revenue on the chip side or on their contract.

Cristiano R. Amon: We're very happy about that. We continue to move towards stability of the QTL revenue stream with those new agreements. As you look at the growth opportunity, I think the auto results speak for themselves. We're now in the IoT segment, really focused on the launch of xElite. In the PC, we announced a new product for XR. And if you believe that that market is finally going to get very large scale, we're well positioned with our partnership with Meta, as well as Samsung and Google. And as IoT, especially industrial, goes through its correction, we expect that to resume growth. So we're focused on what we can control, busy at work with the growth and diversification of the company. And I want to say a big thank you to all of our partners and employees. They helped us get to this quarter. Thank you very much, and I will talk to you all next quarter. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.