Q3 2024 Qualcomm Inc Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm 3rd Quarter Fiscal 2024 Earnings Conference Call.

Operator: School 2024 Earning Conference Call. At this time, all participants are in listen-only mode. Later, we conduct a question-and-answer session. If you'd like to ask a question during that time, please press star, then the number one on your telephone keypad. If you throw your question, press star, then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers.

Operator: 2024 Earnings Conference Call At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. If you'd like to ask a question during that time, please press star then the number one on your telephone keypad. To withdraw your question, press star then the number 2. 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.

Speaker Change: At this time, all participants are in listen-only mode.

Speaker Change: Later we conduct a question and answer session. If you'd like to ask a question during that time, please press star then the number one on your telephone keypad. To withdraw your question, press star then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers.

Operator: Please let me your questions to one question and one follow-up.

Operator: As a reminder, this conference is being recorded July 31st, on July 27th, 2024. Playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. Playback reservation number is 137-47430.

Operator: As a reminder, this conference is being recorded July 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 137-47-430. I would now like to turn the call over to Mauricio Lopez-Edoyon, Vice President of Investor Relations. If you have a question for Mr. Lopez, please go ahead.

Speaker Change: Please limit your questions to one question and one follow-up.

Speaker Change: As a reminder, this conference is being recorded July 31st, 2024.

Speaker Change: The playback number for today's call is 877-660-6853.

Speaker Change: International callers, please dial 201-612-7415

Speaker Change: The playback reservation number is 137-47-430.

Mauricio Lopez: I would now like to turn the call over to Mauricio Lopez-Adoin, Vice President of Invest Relations. Mr. Lopez-Adoin, please go ahead.

Mauricio Lopez: I would now like to turn the call over to Mauricio Lopez-Eddoin, Vice President of Investor Relations.

Mauricio Lopez: Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Mone and the Koch-Polka Walla. In addition, Alex Rogers will join the question-and-answer session.

Mauricio Lopez: Thank you, and good afternoon everyone. 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.

Lopez-Ardoin: Mauricio Lopez, please go ahead.

Speaker Change: Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session.

Mauricio Lopez: You can access our earnings release and a slide presentation that accompanied this call on an Invest Relations website. In addition, this call has been webcast on Qualcomm.com, and a replay will be available on our website later today.

Speaker Change: You can access our earnings release and a slide presentation that accompanies this call on our Investor Relations website. In addition, this call is being webcast on Qualcomm.com and a replay will be available on our website later today.

Mauricio Lopez: During the call today, we will use non-GAAP financial measures as defining Regulation G. And you can find the related reconciliation to GEP on our website.

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.

Mauricio Lopez: We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. Please refer to our SEC findings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward-looking statements.

Mauricio Lopez: 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. 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 for comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon.

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.

Cristiano Amon: And now to comments from Qualcomm's president and chief executive officer, Cristiano Mone. Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today.

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

Cristiano Renno Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered non-gap revenues of $9.4 billion and non-gap earnings per share of $2.33, which was above the midpoint of our guidance range. Revenues from our chipset business of $8.1 billion reflect sequential growth in automotive and IoT and continued traction of our Snapdragon mobile platforms across leading smartphones. Our automotive and IoT revenues were the result of the ongoing execution of our diversification strategy. Licensing business revenues were $1.3 billion.

Cristiano Amon: In fiscal Q3, we delivered non-GAAP revenues of $9.4 billion in non-GAAP earnings per share of $2.33, which was above the midpoint of our guidance range. Revenues from our chipset business of $8.1 billion reflect a sequential growth in automotive and IoT and continued traction of our Snapdragon mobile platforms across leading smartphones. Our automotive and IoT revenues were the result of ongoing execution of our diversification strategy. Licensing business revenues were $1.3 billion.

Cristiano Renno Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today.

Speaker Change: In fiscal Q3, we delivered non-GAAP revenues of $9.4 billion and non-GAAP earnings per share of $2.33, which was above the midpoint of our guidance range.

Speaker Change: Revenues from our chipset business of 8.1 billion dollars reflect the sequential growth in automotive and IoT and continued traction of our Snapdragon mobile platforms across leading smartphones.

Speaker Change: Our automotive and IoT revenues were the result of ongoing execution of our diversification strategy.

Speaker Change: Licensing business revenues were $1.3 billion.

Cristiano Amon: Now, I would like to share some key highlights from the business. In automotive, we secured more than 10 new design wins with global automakers during the quarter. These include the next-generation digital cockpit connectivity and/or ADAS and autonomy. Our Snapdragon digital chassis continued to scale across virtually all OEMs and is now a key asset for the automotive industry. As we look forward, we're focused on extending our industry-leading on-device AI solutions to the Snapdragon digital chassis to enable automotive-centric GNI use cases and applications. It's important to note that our architecture with capabilities across all domains is uniquely positioned to enable sensor data to be utilized simultaneously for ADAS autonomy workloads and user centric GNI experiences in the digital cockpit.

Cristiano Renno Amon: Now, I would like to share some key highlights from the business. In the automotive sector, we secured more than 10 new design wins with global automakers during the quarter. These include the next generation digital cockpit, connectivity, and or ADAS and autonomy. Our Snapdragon digital chassis continues to scale across virtually all OEMs and is now a key asset for the automotive industry. As we look forward, we're focused on extending our industry-leading on-device AI solutions to the Snapdragon Digital Chassis to enable automotive-centric Gen-AI use cases and applications.

Speaker Change: Now, I would like to share some key highlights from the business.

Speaker Change: In automotive, we secured more than 10 new design wins with global automakers during the quarter.

Speaker Change: These include next-generation digital cockpit, connectivity, and or ADAS and autonomy. Our Snapdragon digital chassis continue to scale across virtually all OEMs and is now a key asset for the automotive industry.

Speaker Change: As we look forward, we're focused on extending our industry-leading on-device AI solutions to the Snapdragon Digital Chassis to enable automotive-centric Gen AI use cases and applications.

Cristiano Renno Amon: It's important to note that our architecture, with capabilities across all domains, is uniquely positioned to enable sensor data to be utilized simultaneously for ADAS autonomy workloads and user-centric Gen-AI experiences in the digital cockpit. A great example is our Snapdragon RideFlex solution, which combines digital cockpit and ADAS on a single SoC. Future drivers for automotive growth include Gen AI experiences, the software-defined vehicle transition, central computing replacing microcontrollers, expansion into two-wheelers, and car-to-cloud services. In handsets, we are pleased that all the Galaxy Z Fold 6 and Flip 6 are powered by the Snapdragon HN3 for Galaxy, delivering extraordinary AI capabilities, premium level performance, and power efficiency for foldable devices.

Speaker Change: It is important to note that our architecture

Speaker Change: with capabilities across all domains, is uniquely positioned to enable sensor data to be utilized simultaneously for ADAS autonomy workloads and user-centric Gen AI experiences in the digital cockpit.

Cristiano Amon: A great example is our Snapdragon Ride Flex solution, which combines digital cockpit and ADAS on a single SoC. Future drivers for automotive growth include GNI experiences, the software-defined vehicle transition, central computing replacing microcontrollers, expansion into two wheelers, and car-to-cloud services.

Speaker Change: A great example is our Snapdragon RideFlex solution, which combines digital cockpit and ADAS on a single SoC.

Speaker Change: Future drivers for automotive growth include Gen AI experiences, the software-defined vehicle transition, central computing replacing microcontrollers, expansion into two-wheelers, and car-to-cloud services.

Cristiano Amon: Inhance it, we are pleased that all Galaxy Z Fold 6 and Flip 6 are powered by the Snapdragon H&Tree for Galaxy, delivering extraordinary AI capabilities, premium level performance, and power efficiency for foldable devices. Together with Samsung and our other partners, we continue to push the boundaries of own device GNI on mobile devices. To that end, we're pleased with the growth and trajectory of AI use cases on smartphones. This continued expansion of AI features is a precursor to next generation smartphones, which we believe will become AI centric, with pervasive on-device AI working across applications in the cloud.

Speaker Change: In handsets, we are pleased that all Galaxy Z Fold 6 and Flip 6 are powered by the Snapdragon HN3 for Galaxy, delivering extraordinary AI capabilities, premium level performance, and power efficiency for foldable devices.

Cristiano Renno Amon: Together with Samsung and our other partners, we continue to push the boundaries of on-device Gen AI on mobile devices. To that end, we're pleased with the growth and trajectory of AI use cases on smartphones. This continued expansion of AI features is a precursor to next-generation smartphones, which we believe will become AI-centric, with pervasive on-device AI working across applications in the cloud.

Speaker Change: Together with Samsung and our other partners, we continue to push the boundaries of on-device Gen AI on mobile devices.

Speaker Change: To that end, we're pleased with the growth and trajectory of AI use cases on smartphones.

Speaker Change: This continued expansion of AI features is a precursor to next-generation smartphones, which we believe will become AI-centric, with pervasive on-device AI working across applications in the cloud.

Cristiano Amon: Qualcomm is very well positioned to help drive this transformation across the industry in the coming years.

Cristiano Renno Amon: Qualcomm is very well positioned to help drive this transformation across the industry in the coming years. At our upcoming Snapdragon Summit in October, where we'll reveal details of our next generation Snapdragon 8 flagship mobile platform, the first to be powered by our custom Orion CPU. This platform, combined with new and unparalleled NPU AI capabilities, is already exceeding both our and our customers' performance expectations. At Compute, we're very pleased that CoPilot Plus PCs, powered exclusively by Snapdragon X series platforms, became available for purchase on June 18.

Speaker Change: Qualcomm is very well positioned to help drive this transformation across the industry in the coming years.

Cristiano Amon: At our upcoming Snapdragon Summit in October, we will reveal details of our next-generation Snapdragon 8 flagship mobile platform that first to be powered by our custom Orion CPU. This platform combined with new and unparalleled NPU AI capabilities is already exceeding both our and our customers' performance expectations. In compute, we're very pleased that Co-Pilot Plus PCs powered exclusively by Snapdragon X Series platforms became available for purchase on June 18. This marks the start of one of the most significant transitions in personal computing since the launch of Windows 95 and is restoring performance leadership back to the Windows ecosystem.

Speaker Change: At our upcoming Snapdragon Summit in October , where we'll reveal details of our next-generation Snapdragon 8 flagship mobile platform, the first to be powered by our custom Orion CPU.

Speaker Change: This platform combined with new and unparalleled NPU AI capabilities is already exceeding both our and our customers' performance expectations.

Speaker Change: In Compute, we're very pleased that CoPilot Plus PCs, powered exclusively by Snapdragon X series platforms, became available for purchase on June 18.

Cristiano Renno Amon: This marks the start of one of the most significant transitions in personal computing since the launch of Windows 95 and is restoring performance leadership to the Windows ecosystem. Twenty Co-Pilot Plus PCs from Microsoft, Dell, HP, Lenovo, Acer, Asus, and Samsung are now available across twenty countries and forty-seven retailers. It's important to highlight the unique Co-Pilot Plus and Snapdragon X Elite dedicated retail spaces in Best Buy, Costco, Curry's, Harvey Norman, and many more. We are very pleased with the initial response, with several models sold out at retailers and online. Our retail presence is expected to expand to more than 60 retailers across 25 countries in the coming months.

Speaker Change: This marks the start of one of the most significant transitions in personal computing since the launch of Windows 95 and is restoring performance leadership back to the Windows ecosystem.

Cristiano Amon: 20 Co-Pilot Plus PCs from Microsoft, Dell, HP, Lenovo, ASER, ASUS, and Samsung are now available across 20 countries and 47 retailers. It's important to highlight the unique Co-Pilot Plus and Snapdragon X Elite dedicated retail spaces in Best Buy, Costco, Curries, Harvey Norman, and many more. We are very pleased with the initial response, with several models sold out every tailors in online. Our retail presence is expected to expand to more than 60 retailers across 25 countries in the coming months. We're also working closely with more than 50 global commercial customers to drive Snapdragon readiness in their respective environments.

Speaker Change: Twenty Co-Pilot Plus PCs from Microsoft, Dell, HP, Lenovo, Acer, Asus, and Samsung are now available across twenty countries and forty-seven retailers.

Speaker Change: It's important to highlight.

Speaker Change: The Unique, Co-Pilot Plus, and Snapdragon X Elite dedicated retail spaces in Best Buy, Costco, Curry's, Harvey Norman, and many more.

Speaker Change: We are very pleased with the initial response with several models sold out at retailers and online.

Speaker Change: Our retail presence is expected to expand to more than 60 retailers across 25 countries in the coming months.

Cristiano Renno Amon: We're also working closely with more than 50 global commercial customers to drive Snapdragon readiness in their respective environments. Additionally... We added the Snapdragon X-Series platforms to the Qualcomm AI Hub, allowing developers to easily take advantage of optimized AI models to create responsive, power-efficient, and compelling on-device generative AI applications for co-pilot plus PC. As we look forward to 2025, we are already working with OEMs on the next wave of CoPilot Plus PCs.

Speaker Change: We're also working closely with more than 50 global commercial customers to drive Snapdragon readiness in their respective environments.

Cristiano Amon: Additionally, we added the Snapdragon X Series platforms to the Qualcomm AI Hub, allowing developers to easily take advantage of optimize AI models to create responsive, power efficient, and compelling on-device generative AI applications for Copilot Plus PCs.

Speaker Change: Additionally,

Speaker Change: We added the Snapdragon X-series platforms to the Qualcomm AI Hub.

Speaker Change: allowing developers to easily take advantage of optimized AI models to create responsive, power-efficient, and compelling on-device generative AI applications for Copilot Plus PCs.

Cristiano Amon: As we look forward to 2025, we are already working with OEMs on the next wave of Copilot Plus PCs. In addition to new design wins, our X Series product roadmap will expand to address PCs with retail prices as low as $700 without compromising NPU performance. Longer term, we believe the benefits of Snapdragon X Series platforms make it clear that the PC ecosystem has begun the transition to an ARM-compatible architecture. As we look forward, we're forecasting that at least 50 percent of PCs will be AI capable by 2027. Given our clear technology leadership and competitive roadmap, we expect to be positioned as one of the top silicon suppliers for this devices.

Speaker Change: As we look forward to 2025,

Speaker Change: We are already working with OEMs on the next wave of CoPilot Plus PCs.

Cristiano Renno Amon: In addition to new design wins, our X-Series product roadmap will expand to address PCs with retail prices as low as $700 without compromising NPU performance. Longer term, we believe the benefits of Snapdragon X-Series platforms make it clear that the PC ecosystem has begun the transition to an ARM-compatible architecture. As we look forward, we're forecasting that at least 50% of PCs will be AI-capable by 2027. Given our clear technology leadership and competitive roadmap, we expect to be positioned as one of the top silicon suppliers for this device. We also remain excited about the continued positive momentum in XR, particularly the success of META's Ray-Ban smart glass. Sales are exceeding our expectations, due in part to the integration of LLAMA into the experience.

Speaker Change: In addition to new design wins, our X-Series product roadmap will expand to address PCs with retail prices as low as $700 without compromising NPU performance.

Speaker Change: Longer term, we believe the benefits of Snapdragon X-Series platforms make it clear that the PC ecosystem has begun the transition to an ARM-compatible architecture.

Speaker Change: As we look forward, we're forecasting that at least 50% of PCs will be AI-capable by 2027.

Speaker Change: Given our clear technology leadership and competitive roadmap, we expect to be positioned as one of the top silicon suppliers for these devices.

Cristiano Amon: We also remain excited about the continued positive momentum in XR, particularly the success of Meta's Ray-Ban Smart Glasses. Sales are exceeding our expectations, due in part to the integration of Lama into the experience. We foresee an acceleration in demand for extended and mixed reality devices as new use cases enabled by Gen AI gain scale. Snapdragon XR remains the industry platform of choice, and we are engaged with major ecosystem players, including Meta, Google, Microsoft, and others. Most recently, at the Augmented World Expo, we showcased two of the latest XR devices: NTT's Augmented Reality Glasses and Sony's upcoming head-mounted mixed reality device.

Speaker Change: We also remain excited about the continued positive momentum in XR, particularly the success of META's Ray-Ban smart glasses.

Speaker Change: Sales are exceeding our expectations due, in part, to the integration of LLAMA into the experience.

Cristiano Renno Amon: We foresee an acceleration in demand for extended and mixed reality devices as new use cases enabled by Gen-AI gain scale. Snapdragon XR remains the industry platform of choice, and we are engaged with major ecosystem players, including Meta, Google, Microsoft, and others. Most recently, at the Augmented World Expo, we showcased two of the latest XR devices, NTT's augmented reality glasses, and Sony's upcoming head-mounted mixed reality device.

Speaker Change: We foresee an acceleration in demand for extended and mixed reality devices as new use cases enabled by Gen AI gain scale.

Speaker Change: Snapdragon XR remains the industry platform of choice and we are engaged with major ecosystem players including Meta, Google, Microsoft and others.

Speaker Change: Most recently, at the Augmented World Expo, we showcased two of the latest XR devices, NTT's augmented reality glasses, and Sony's upcoming head-mounted mixed reality device.

Cristiano Amon: An industrial IoT, we're pleased to report that we're now collaborating with Aramco on connectivity, AI, and advanced computing solutions for industrial and enterprise use cases in Saudi Arabia. This also includes an accelerating development of the industrial 4G, 5G, and non-terrestrial networks ecosystem, including the first significant wide area private cellular network for IoT. As the industrial sector is transformed by AI, we expect an increase in demand for more complex on-device processing. This trend aligns well with our core capabilities, especially the computing and AI roadmap we have built for ALTO and PC. As high performance processing in intelligence at the edge becomes critical for the next phase of enterprise digital transformation, we see a unique opportunity to build a leadership position in this phase.

Cristiano Renno Amon: In Industrial IoT, we're pleased to report that we're now collaborating with Aramco on connectivity, AI, and advanced computing solutions for industrial and enterprise use cases in Saudi Arabia. This also includes accelerating the development of the industrial 4G, 5G, and non-terrestrial network ecosystem, including the first significant wide-area private cellular network for IoT. As the industrial sector is transformed by AI, we expect an increase in demand for more complex on-device processing. This trend aligns well with our core capabilities, especially the computing and AI roadmap we have built for Alto and PC.

Speaker Change: In Industrial IoT, we are pleased to report that we are now collaborating with Aramco on connectivity, AI, and advanced computing solutions for industrial and enterprise use cases in Saudi Arabia.

Speaker Change: This also includes accelerating development of the industrial 4G, 5G, and non-terrestrial networks ecosystem, including the first significant wide-area private cellular network for IoT.

Speaker Change: As the industrial sector is transformed by AI, we expect an increase in demand for more complex on-device processing.

Speaker Change: This trend aligns well with our core capabilities, especially the computing and AI roadmap we have built for Alto and PC.

Cristiano Renno Amon: As high-performance processing and intelligence at the edge becomes critical for the next phase of enterprise digital transformation, we see a unique opportunity to build a leadership position in this space. In the next few months, we will announce our new dedicated product road map for industrial IoT, including support for multiple operating systems and the ability to run multi-billion parameter AI models in a comprehensive development platform. Finally, we're very pleased to share that we recently signed a key long-term licensing agreement with Honor, a leading Chinese smartphone OEM.

Speaker Change: As high performance processing and intelligence at the edge becomes critical for the next phase of enterprise digital transformation, we see a unique opportunity to build a leadership position in this space.

Cristiano Amon: In the next few months, we will announce our new dedicated product roadmap for industrial IoT, including support for multiple operating systems, the ability to run multi-billion-parameter AI models, and a comprehensive development platform.

Speaker Change: In the next few months, we will announce our new dedicated product roadmap for Industrial IoT, including support for multiple operating systems, ability to run multi-billion-parameter AI models, and a comprehensive development platform.

Cristiano Amon: Finally, we're very pleased to share that we recently signed a key long-term licensing agreement with Honor, a leading Chinese smartphone OEM. We continue to be pleased with the company's diversification beyond mobile, and we're particularly proud of what we have accomplished to date in automotive and PC.

Speaker Change: Finally, we're very pleased to share that we recently signed a key long-term licensing agreement with Honor, a leading Chinese smartphone OEM.

Cristiano Renno Amon: We continue to be pleased with the company's diversification beyond mobile, and we're particularly proud of what we have accomplished to date in automotive and PC. We will provide additional updates on our diversification strategy at our Investor Day in New York on November 19th. I would now like to turn the call over to Akash.

Speaker Change: We continue to be pleased with the company's diversification beyond mobile, and we're particularly proud of what we have accomplished to date in automotive and PC.

Cristiano Amon: We will provide additional updates on our diversification strategy at our Investor Day in New York on November 19.

Speaker Change: We will provide additional updates on our diversification strategy at our Investor Day in New York on November 19.

Akash Palkhiwala: I would now like to turn the call over to Akash. Thank you, Cristiano, and good afternoon, everyone. I'll start with our third fiscal quarter earnings. We're pleased to announce strong non-GAAP results, with revenue of $9.4 billion, an EPS of $2.33, both of which were above the midpoint of our guidance. QTL revenues of $1.3 billion, an EBT margin of 70%, were in line with our expectations. UCT delivered revenues of $8.1 billion, an EBT margin of 27%, which was at the high end of our guidance range, driven by upside in both IoT and automotive. QCT handset revenues of $5.9 billion were in line with expectations, reflecting our scale in premium Android handsets and greater than 50% year-over-year growth in revenues from Chinese OEMs. QCT IoT revenues increased 9% sequentially to $1.4 billion as we continue to see a gradual recovery in the industry environment.

Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with our third fiscal quarter earnings. We are pleased to announce strong non-GAAP results with revenue of $9.4 billion and EPS of $2.33, both of which were above the midpoint of our guide. QTL revenues of $1.3 billion, and an EBT margin of 70%, were in line with our expectations. QCT delivered revenues of $8.1 billion, and an EBT margin of 27%, which was at the high end of our guidance range, driven by upside in both IoT and automotive.

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

Akash Palkhiwala: UCT handset revenues of $5.9 billion were in line with expectations, reflecting our scale in premium Android handsets and greater than 50% year over year growth in revenues from Chinese OEMs. UCT IoT revenues increased 9% sequentially to $1.4 billion as we continue to see a gradual recovery in the industry environment. We delivered our fourth consecutive quarter of record QCT automotive revenues of $811 million, with sequential growth of 34%. Our revenue acceleration reflects content growth in new vehicle launches as we become the leading supplier of advanced computing and connectivity solutions to the automotive industry.

Akash: Thank you, Cristiano, and good afternoon, everyone.

Akash Palkhiwala: Lastly, we return $2.3 billion to stockholders during the quarter, including $1.3 billion in stock repurchases and $949 million in dividends. Before turning to guidance, I would like to outline three factors included in our, First, consistent with our long-term financial planning assumption of largely flat handset units. We continue to estimate global 3G, 4G, and 5G units in calendar 24 to be flat to slightly up on a year-over-year basis. Second, our license to export products to Huawei, which was set to expire in late calendar 24, was revoked on May 7.

Akash: I'll start with our third fiscal quarter earnings.

Akash: We are pleased to announce strong non-GAAP results with revenue of $9.4 billion and EPS of $2.33.

Akash: both of which were above the midpoint of our guidance.

Speaker Change: QTL revenues of $1.3 billion, an EBT margin of 70%, were in line with our expectations.

Speaker Change: QCT delivered revenues of $8.1 billion, an EBT margin of 27%, which was at the high end of our guidance range, driven by upside in both IoT and automotive.

Speaker Change: UCT handset revenues of $5.9 billion were in line with expectations.

Speaker Change: Reflecting our scale in premium Android handsets and greater than 50% year-over-year growth in revenues from Chinese OEMs.

Speaker Change: QCTIOT revenues increased 9% sequentially to $1.4 billion as we continue to see a gradual recovery in the industry environment.

Akash Palkhiwala: We delivered our fourth consecutive quarter of record QCT automotive revenues of $811 million, with sequential growth of 34%. Our revenue acceleration reflects content growth in new vehicle launches, as we've become the leading supplier of advanced computing and connectivity solutions to the automotive industry. Lastly, we returned $2.3 billion to stockholders during the quarter, including $1.3 billion in stock repurchases and $949 million in dividends.

Speaker Change: We delivered our fourth consecutive quarter of record QCT automotive revenues of $811 million, with sequential growth of 34%.

Speaker Change: Our revenue acceleration reflects content growth in new vehicle launches, as we become the leading supplier of advanced computing and connectivity solutions to the automotive industry.

Speaker Change: Lastly, we returned $2.3 billion to stockholders during the quarter, including $1.3 billion in stock repurchases and $949 million in dividends.

Akash Palkhiwala: Before turning to guidance, I would like to outline three factors included in our forecast. First, consistent with our long-term financial planning assumption of largely flat handset units, we continue to estimate global 3G, 4G, and 5G units in calendar 24 to be flat to slightly up on a year-over-year basis. Second, our license to export products to Huawei, which was said to expire in late calendar 24, was revoked on May 7. This change will impact our revenues in both the current quarter and the first quarter of fiscal 25. Lastly, our fourth fiscal quarter imputes an additional week as we align our fiscal reporting period with the calendar quarter every five to six years.

Akash Palkhiwala: This change will impact our revenues in both the current quarter and the first quarter of Fiscal 25. Lastly, our fourth fiscal quarter includes an additional week as we align our fiscal reporting period with the calendar quarter end every five to six years. Now turning to fourth fiscal quarter guidance, we are forecasting revenues of $9.5 to $10.3 billion and non-GAAP EPS of $2.45 to $2.65. In QTL, we estimate revenues of $1.35 to $1.55 billion and EBT margins of 70 to 74 percent, reflecting normal seasonality for handset units. In QCT, we expect revenues of $8.1 to $8.7 billion and EBT margins of 27 to 29 percent. We expect QCT hazard revenues to grow by a low single-digit percentage sequentially.

Speaker Change: Before turning to guidance, I would like to outline three factors included in our forecast.

Speaker Change: First, consistent with our long-term financial planning assumption of largely flat handset units.

Speaker Change: We continue to estimate global 3G, 4G, 5G units in calendar 24 to be flat to slightly up on a year-over-year basis.

Speaker Change: Second, our license to export products to Huawei, which was set to expire in late calendar 24, was revoked on May 7th.

Speaker Change: This change will impact our revenues in both the current quarter and the first quarter of Fiscal 25.

Speaker Change: Lastly, our fourth fiscal quarter includes an additional week as we align our fiscal reporting period with the calendar quarter end every five to six years.

Akash Palkhiwala: Now turning to fourth fiscal quarter guidance. We are forecasting revenues of $9.5 to $10.3 billion in non-GAAP EPS of $2.45 to $2.65. In QTL, we estimate revenues of $1.35 to $1.55 billion, and EBT margins of 70 to 74%, reflecting normal seasonality for hands at units. In QCT, we expect revenues of $8.1 to $8.7 billion, and EBT margins of 27 to 29%. We expect QCT hands at revenues to grow by low single-digit percented sequentially. This forecast reflects an increase in purchases from a modern-only hands at customer, partially offset by seasonally lower Android revenue, ahead of our new Snapdragon premium chipset launch in the first quarter of fiscal 25.

Akash Palkhiwala: This forecast reflects an increase in purchases from a modem-only handset customer partially offset by seasonally lower Android revenue ahead of our new Snapdragon Premium chipset launch in the first quarter of Fiscal 25. We expect QCT IoT revenues will increase by a low double-digit percentage sequentially, driven by growth across consumer, networking, and industry. Following our outperformance in the third quarter, we expect QCT automotive revenues to remain flat in the fourth fiscal quarter. We're on track to deliver approximately 50% year-over-year revenue growth in Fiscal 24, providing confidence in our ability to execute on our long-term target. Lastly, we expect non-GAAP operating expenses to be approximately $2.2 billion.

Speaker Change: Now turning to fourth fiscal quarter guidance.

Speaker Change: We are forecasting revenues of $9.5 to $10.3 billion, and non-GAAP EPS of $2.45 to $2.65.

Speaker Change: In QTL, we estimate revenues of $1.35 to $1.55 billion and EBT margins of 70% to 74%, reflecting normal seasonality for handset units.

Speaker Change: In QCT, we expect revenues of $8.1 to $8.7 billion and EBT margins of 27 to 29 percent.

Speaker Change: We expect QCT hands-out revenues to grow by low single-digit percentage sequentially.

Speaker Change: This forecast reflects an increase in purchases from a modem-only handset customer, partially offset by seasonally lower Android revenue, ahead of our new Snapdragon Premium chipset launch in the first quarter of Fiscal 25.

Akash Palkhiwala: We expect QCT IoT revenues will increase by low double-digit percent sequentially, driven by growth across consumer networking and industrial. Following our performance in the third quarter, we expect QCT automotive revenues to remain flat in the fourth fiscal quarter. We are on track to deliver approximately 50% year-over-year revenue growth in fiscal 24, providing confidence in our ability to execute to our long-term targets. Lastly, we expect non-GAAP operating expenses to be approximately $2.2 billion.

Speaker Change: We expect UCT IoT revenues will increase by a low double-digit percentage sequentially, driven by growth across consumer, networking, and industrial.

Speaker Change: Following our outperformance in the third quarter, we expect QCT automotive revenues to remain flat in the fourth fiscal quarter.

Speaker Change: We are on track to deliver approximately 50% year-over-year revenue growth in Fiscal 24, providing confidence in our ability to execute to our long-term targets.

Akash Palkhiwala: In closing, we are pleased with our execution and financial performance in fiscal 24. Based on the midpoint of our guidance, we are on track to deliver strong non-GAAP EPS growth of approximately 20% relative to fiscal 23.

Akash Palkhiwala: In closing, we are pleased with our execution and financial performance in Fiscal 24. Based on the midpoint of our guidance, we are on track to deliver strong non-gap EPS growth of approximately 20% relative to FY23. Over the last quarter, industry support for our vision for on-device AI has accelerated and been validated by several key players. Beyond handsets and PCs, we expect on-device AI to drive competitive differentiation for us in industrial, networking, automotive, and XR.

Speaker Change: Lastly, we expect non-GAAP operating expenses to be approximately $2.2 billion.

Speaker Change: In closing, we are pleased with our execution and financial performance in Fiscal 24.

Speaker Change: Based on the midpoint of our guidance, we're on track to deliver strong non-gap EPS growth of approximately 20% relative to fiscal 23.

Akash Palkhiwala: Over the last quarter, industry support for our vision for on-device AI has accelerated and been validated by several key players. Beyond handsets and PCs, we expect on-device AI to drive competitive differentiation for us in industrial, networking, automotive, and XR. Our leading technology and product portfolio has positioned us to continue to execute on our diversification strategy, and in the months ahead, we look forward to introducing new industry-leading products across all our end markets.

Speaker Change: Over the last quarter, industry support for our vision for on-device AI has accelerated and been validated by several key players.

Speaker Change: Beyond handsets and PCs, we expect on-device AI to drive competitive differentiation for us in industrial, networking, automotive, and XR.

Akash Palkhiwala: Our leading technology and product portfolio has positioned us to continue to execute on our diversification strategy. And in the months ahead, we look forward to introducing new industry-leading products across all our end markets. Finally, as Cristiano outlined, we'll be hosting our Investor Day on November 19, where we'll provide an update on our IoT and automotive diversification strategies. This concludes our prepared remarks. Back to you, Mauricio. Thank you.

Speaker Change: Our leading technology and product portfolio has positioned us to continue to execute on our diversification strategy, and in the months ahead, we look forward to introducing new industry-leading products across all our end markets.

Akash Palkhiwala: Finally, as Krishna outlined, we'll be hosting our Investor Day on November 19, where we'll provide an update on our IoT and automotive diversification strategy.

Speaker Change: Finally, as Cristiano outlined, we'll be hosting our Investor Day on November 19th.

Mauricio Lopez: This concludes our prepared remarks. Back to you, Mauricio. Thank you, Kosh.

Mauricio Lopez: Thank you, Akash. Operator, we are now ready for questions.

Cristiano Renno Amon: where we'll provide an update on our IoT and automotive diversification strategy.

Operator: Operator, we're now ready for questions. To cue a question, press star, then the number one. If you're sure of your question, press star two.

Speaker Change: This concludes our prepared remarks. Back to you, Mauricio.

Operator: To queue a question, press star, then the number one. To answer your question, press star 2. If you're using a speakerphone, please pick up your handset before pressing the numbers.

Mauricio Lopez: Thank you, Akash. Operator, we are now ready for questions.

Operator: If you're using speakerphone, please pick up your handset before pressing the numbers. One moment, please, for the first question.

Speaker Change: To queue a question, press star, then the number 1. To trigger a question, press star 2. If you're using a speakerphone, please pick up your handset before pressing the numbers.

Operator: One moment, please, for the first question. The first question will come from the line of Matt Ramsey with TD Cowan. Please go ahead with your question.

Matt Ramsey: First question comes from the line of Matt Ramsey with TD Count. Please go ahead with your question.

Matt Ramsey: Thank you very much.

Speaker Change: One moment, please, for the first question.

Matthew D. Ramsay: Thank you very much. Good afternoon, everybody.

Cristiano Amon: Good afternoon, everybody. I have a couple of questions, guys, really highlighting some of the diversification that the company is now starting to deliver on in the revenue. I guess the first one is in the automotive business. I'm pretty big upside there. Maybe you could talk a little bit about that you're seeing some of this revenue come through now in OEM programs that no doubt you won two or three years ago. You think that continues as we roll through the next several quarters. I mean, what kind of momentum could we see as some of these units start to roll out?

Speaker Change: First question will come from the line of Matt Ramsey with TD Cowen. Please go ahead with your question.

Matthew D. Ramsay: Thank you very much. Good afternoon everybody. I have a couple of questions. Guys, really highlighting some of the diversification the company is doing.

Matthew D. Ramsay: I have a couple of questions, guys, really highlighting some of the diversification now starting to deliver on revenue. I guess the first one is in the automotive business; there is some pretty big upside there. And maybe you could talk a little bit about, like, that you're seeing some of this revenue come through now in OEM programs that no doubt you won two or three years ago. Do you think that will continue as we roll through the next several quarters?

Matthew D. Ramsay: Now starting to deliver on in the revenue, I guess the first one.

Speaker Change: is in the automotive business.

Matthew D. Ramsay: We're pretty big upside there, and maybe you could talk a little bit about, like, you're seeing some of this revenue come through now in OEM programs that no doubt you won two or three years ago.

Matthew D. Ramsay: I mean, what kind of momentum could we see as some of these units start to roll out from, like I said, programs you won a long time ago? And then, Cristiano, the second one: people keep asking lots of questions about AI PCs. As you know, you're getting really close here to when the holiday ramp period would start for you to sell units. So maybe you could give us your current take on your expectations of what the PC market could bring in terms of units or revenue for your company as we look forward into the next fiscal year.

Cristiano Amon: from like the programs you won a long time back.

Cristiano Renno Amon: You think that continues as we roll through the next several quarters? I mean, what kind of momentum could we see as some of these units start to roll out from, like I said, programs you won a long time back? And then, Cristiano, the second one.

Cristiano Amon: And then Cristiano, the second one. People keep asking lots of questions about AI PCs. As you know, you're getting really close here to win. The holiday ramp period would start for you to sell in units.

Cristiano Renno Amon: People keep asking lots of questions about AIPCs. As you know, you're getting really close here to when the holiday ramp period would start for you to sell in units.

Cristiano Amon: So maybe you could give us your current take on your expectations of what the PC market could bring in terms of unit to revenue for your company as we look forward into the next fiscal year. Thank you. Very good. Thank you, Matt. Thanks for asking the questions.

Speaker Change: Maybe you could give us your current take on your expectations of what the PC market could bring in terms of units or revenue for your company as we look forward into the next fiscal year. Thanks guys.

Cristiano Renno Amon: Very good. Thank you, Matt. Thanks for asking the questions.

Cristiano Amon: Let me start with automotive. Look, we're very pleased with automotive performance. And I wouldn't start by saying, this is you continue to see signs off of the pipeline translated into revenue. There are a couple of things we really like it. The first one is our automotive revenues, all about share of new cars being launched with our content. Also, it's independent whether the industry is about internal combustion or EV because it's all about digital. Would the Snapdragon digital chassis really become a key asset for the automotive industry? And just within the quarter, we have not only the launch of 10 new models with our technology, but also we actually have 10 new design wins, which continue to add to the pipeline.

Cristiano Renno Amon: Let me start with the automotive industry. Look, we're very pleased with the automotive performance, and I want to start by saying this is [inaudible] Also, it's independent, whether the industry is about internal combustion or EV, because it's all about digital, the snapdragon digital chassis really has become a key asset for the automotive industry. And just within the quarter, we have not only the launch of 10 new models with our technology, but we also have 10 new design wins, which continue to add to the pipeline.

Speaker Change: Very good. Thank you, Matt. Thanks for asking the questions. Let me start with automotive. Look, we're very pleased with automotive performance, and I want to start by saying this is

Speaker Change: you continue to see signs of the pipeline translated into revenue. There are a couple things we really like. The first one is our automotive revenue is all about share of new cars being launched with our content.

Speaker Change: Also, it's independent whether the industry is about internal combustion or EV, because it's all about digital, would be the snapdragon digital chassis really became.

Speaker Change: a key asset for the automotive industry. And just within the quarter, we have not only the launch of 10 new models,

Cristiano Renno Amon: So we're very excited about that. We'll continue to see as new cars get launched with our technology from the pipeline, revenue grow. And as Akash said in the script, we're actually on track to the metric we provided for $4 billion in 2026. One side comment on your question.

Cristiano Amon: So we're very excited about that. We're continue to see as new cars get launched with our technology from the pipeline, the revenue to grow. And as the cash said in the script, we're actually on track to the metric we provided for $4 billion in 2026.

Speaker Change: with our technology, but also we actually have 10 new design wins, which continue to

Speaker Change: to the pipeline.

Speaker Change: We're very excited about that. We will continue to see as new cars get launched with our technology from the pipeline, the revenue to grow. And as Akash said in the script, we're actually on track to the metric we provided for $4 billion in 2026.

Cristiano Amon: One one side comment on your question. An upside is what Genai is doing in automotive. GenAI use cases, especially using large language models for audio. It was a great user interface for more behind the wheel. We're starting to see a lot of interesting use cases being developed that upside to our model. It could be an upgrade of content in the digital cockpit that we have in.

Cristiano Renno Amon: An upside is what GenAI is doing in the automotive industry. GenAI use cases, especially using large language models for audio, are a great user interface for more behind the wheel. We're starting to see a lot of interesting use cases being developed. That upside to our model, it could be an upgrade of content in the digital cockpit that we have. The second comment, which is about PCs, I will start by saying we're very pleased.

Speaker Change: One side comment on your question.

Akash: An upside.

Speaker Change: is what Gen AI is doing in automotive. Gen AI use cases, especially using large language models.

Speaker Change: for audio. It was a great user interface, firmware behind the wheel. We're starting to see...

Speaker Change: A lot of interesting use case being developed that upside to our model. It could be an upgrade of content In in the digital cockpits that we have in the second comment, which which is about PCs I will start by saying we're very pleased

Cristiano Amon: The second comment with which is about PCs. I will start by saying we're very pleased is exceeding our expectations. We, it's a new version of Windows Decopala Plus is a new architecture with an ARM compatible. We expected that will ramp over a period of time, but what we have seen in the market right now with the 20 models that get launched is exceeding our internal targets. Some models, as I mentioned in my prepared remarks, had sold out. And I think we should expect that that will continue to be a crescendo, you know, slow and steady as the market transition.

Cristiano Renno Amon: It's exceeding our expectations. We, it's a new version of Windows, and Copilot Plus is new. [inaudible] as the market transitions. We will have new product announcements coming up at IFA, and you're going to continue to see more Copilot Plus features coming from Microsoft. We're very happy about that, as it is the same thing we did with Alto. We expect PC to be the next biggest driver of diversification for the company, and we'll continue to monitor it every quarter.

Speaker Change: is exceeding our expectations.

Speaker Change: It's a new version of Windows, the Copilot Plus is a new...

Speaker Change: architecture with an arm compatible. We expect that that will ramp over a period of time. But what we have seen in the market right now with the 20 models that get launched is exceeding our internal targets.

Speaker Change: Some models, as I mentioned in my prepared remarks.

Speaker Change: had sold out.

Cristiano Amon: We will have new product announcements coming up at EFA. And you're going to continue to see more Copilot Plus features coming for Microsoft. We're very happy about that as you know the same thing we did with auto expect PC to be the next biggest driver of diversification, diversification for the company. And we'll continue to track every quarter.

Speaker Change: And I think we should expect that that will continue to be a crescendo, you know, slow and steady as the market transition.

Speaker Change: We will have new product announcements coming up.

Speaker Change: at IFA, and you're gonna continue to see more Copilot Plus features coming from Microsoft. We're very happy about that as, you know, the same thing we did with AutoExpect PC to be the next biggest driver of diversification.

Samik Chatterjee: Our next question is from the line of Samik Chatterjee with J.P. Morgan.

Operator: Our next question is from the line of Samik Chatterjee with J.P. Morgan. Please proceed with your question.

Speaker Change: Diversification for the company and we'll continue to track every quarter.

Samik Chatterjee: Please receive your question. Hi, thank you for taking the questions, and congrats on the strong print here. I guess a question if I start you off with those smartphone questions here, relative to AI smartphones.

Speaker Change: Our next question is from the line of Samik Chatterjee with J.P. Morgan. Please proceed with your question.

Samik Chatterjee: Hi, thank you for taking the questions and congrats on the strong print here. I guess, Cristiano, if I start you off with a smartphone question here related to AI smartphones.

Samik Chatterjee: One, can you share if you're seeing any appreciable difference in the demand for smartphones with AI features in them from consumers already? And as you look to the pipeline in terms of design wins for next year, how are you thinking about proliferation of the FT AI features?

Samik Chatterjee: AI features and capabilities into more mid-tier or outside of the flagship tier phones that you work with with your customers? And have a follow-up.

Cristiano Amon: Thank you for your questions, Samik. So, on smartphones, I will start by saying one thing that we really like. And I think it was reflected by some of the metrics provided by Akash. He talks about in his remarks, 50% growth within China with Chinese OEMs. So AI has expanded the size of the premium tier. So even in a market which it's kind of flatish to low single digits and growth, the premium tier is actually growing faster. And we've seen that. We've seen a larger premium tier enabled by AI. And to your specific question, we are happy with the trajectory of AI features.

Speaker Change: Cristiano Amon, Mauricio Lopez

Cristiano Renno Amon: Thank you for your question, Samik. So on smartphones, I will start by saying one thing that we really like, and I think it was reflected by some of the metrics provided by Akash, which he talks about in his remarks, 50% growth within China with Chinese OEM. So AI has expanded the size of the premium tier. So even in a market where it's kind of flattish to a low single digit in growth, the premium tier is actually growing faster. And we've seen that. We have seen a larger premium tier enabled by AI. And to your specific question.

Speaker Change: Thank you for your questions, Samik. So on smartphones, I would start by saying one thing that we really like

Speaker Change: And I think it was reflected by some of the metrics provided by Akash he talks about in his remarks, 50% growth within China with Chinese OEMs.

Speaker Change: So AI has expanded the size of the premium tier.

Speaker Change: So, even in a market which it's kind of flattish to a low single digit in growth, the premium tier is actually growing faster. And we've seen that. We've seen a larger premium tier enabled by AI. And to your specific question.

Cristiano Renno Amon: We are happy with the trajectory of AI features. We used to have a few, now we have tens of AI features, and eventually, when they get to hundreds, we're going to start to see a change that will make any smartphone with AI features become an AI smartphone. We don't have any heroic assumptions in our model, but we actually like the direction this is going in.

Cristiano Amon: We used to have a few. Now we have tens of AI features, and eventually, when they get to hundreds, we're going to start to see a change that will make a smartphone with AI features become an AI smartphone. We don't have any heroic assumptions in our model, but we actually like the direction this is going that could create an interesting upside if we have an AI driven upgrade cycle. Still early in the process, but the use cases are becoming more interesting. I pointed to the increase of use cases in the galaxy of Flip Six and Fold Six.

Speaker Change: We are happy with the trajectory of AI features. We used to have...

Speaker Change: A few, now we have tens of AI features, and eventually when they get to hundreds, we're going to start to see a change that a smartphone with AI feature will become an AI smartphone.

Cristiano Renno Amon: That could create an interesting upside if we have an AI-driven upgrade cycle. It's too early in the process, but the use cases are becoming more interesting. I pointed to the increase in use cases in the Galaxy Flip 6 and Fold 6. China has a number of use cases.

Speaker Change: We don't have any heroic assumptions in our model, but we actually like the direction this is going that could create an interesting upside if we have an AI driven upgrade cycle.

Speaker Change: It's too early in the process, but the use cases are becoming more interesting. I pointed to the increase of use cases in the Galaxy Flip 6 and Fold 6.

Cristiano Amon: China has a number of use cases. They're going to be launched in the next flagship. And I know you ask about bringing AI to the mass tier. We intend to do that. The same thing we're doing with the PC, which is as we expand the roadmap. We're not compromising on AI capabilities. We're going to see us doing that within our mobile roadmap. But on the premium tier, I'm actually very excited given the upcoming launch of our next Snapdragon that has our custom CPU, and you're going to see the same shift in performance that we have done in the PC ecosystem, restoring the performance back to the Windows ecosystem.

Cristiano Renno Amon: They're going to be launched in the next flagship. I know you asked about bringing AI to the next tier. We intend to do that. The same thing we're doing with the PC, which is, as we expand the roadmap, we're not compromising on AI capabilities. We're going to see us doing that within our mobile roadmap. But on the premium tier, I'm actually very excited, given the upcoming launch of our next Snapdragon that has our custom CPU, and you're going to see the same shift in performance that we have done in the PC ecosystem, restoring performance back to the Windows ecosystem. You're gonna see me doing something similar on the phone. So, AI is gonna be a big part of this story. Thank you.

Speaker Change: China has a number of use cases that are going to be launched in the next flagship.

Speaker Change: I know you asked about bringing AI to the next year, we intend to do that, the same thing we're doing with the PC.

Speaker Change: Which is as we expand the roadmap, we're not compromising on AI capabilities. We're going to see us doing that.

Speaker Change: within our mobile roadmap.

Speaker Change: But on the premium tier, I'm actually very excited given the upcoming launch of our next Snapdragon that has our custom CPU, and you're going to see the same shift in performance.

Cristiano Amon: You're going to see doing us something similar in phone. So, in an AI is going to be a big part of this story. Thank you.

Speaker Change: that we have done in the PC ecosystem, restoring the performance back to the Windows ecosystem. You're gonna see doing something similar in phones. And AI is gonna be a big part of this story. Thank you.

Samik Chatterjee: And a quick one for Akash. Akash, the guide for September revenues, that looks pretty similar to what you were sort of soft guiding us. Transcribed by https://otter.ai

Unknown Executive: Sorry.

Akash Palkhiwala: In a quick one for Akash, the guide for September revenues that looks pretty similar to what you were sort of soft guiding us to back sort of 90 days ago, although you now have incremental headwinds with the license to export to Huawei. How should we think about where you're finding the offsets? Where is the upside to help you offset? that incremental headwind.

Speaker Change: And a quick one for Akash. Akash, the guide for September revenues...

Speaker Change: You were sort of soft guiding us to back sort of 90 days ago, although you now have incremental headwinds with the license to export to Huawei, how should we think about sort of where you're finding the offsets, where is the upside to help you offset that incremental headwind?

Akash Palkhiwala: Thank you.

Akash Palkhiwala: Yeah, thanks, Samik. Samik, we're pretty happy with the way the quarters played out, right? If you look at our handset business, we're growing; we're guiding that will grow low single digit percentage on a quarter of a quarter basis. IoT, we're guiding low double-digit growth, and we're seeing strength across industrial edge networking and consumer.

Akash Palkhiwala: Yeah, thanks, Samik. We're pretty happy with the way the quarter's played out, right?

Akash Palkhiwala: If you look at our handset business, we're growing; we're guiding that we'll grow a low single-digit percentage on a quarter-over-quarter basis. For IoT, we're guiding low double-digit growth, and we're seeing strength across industrial, edge networking, and consumer. And then Auto, coming off of an extremely strong quarter in June, we're guiding flat revenue in the September quarter. And so all of these, both IoT and automotive, are incremental to our previous expectations, and you're seeing that benefit show up in our guidance.

Speaker Change: Thank you.

Speaker Change: Yeah, thanks Amip.

Speaker Change: Samik, we're pretty happy with the way the quarters played out, right? If you look at our handset business, we are growing, we are guiding that we'll grow low single-digit percentage on a quarter-over-quarter basis.

Akash Palkhiwala: And then auto coming off of a extremely strong quarter in tune, we're guiding flat revenue. In the September quarter. And so all of these, both IoT and automotive, are incremental to our previous expectations. And you're seeing that benefit show up in our guidance.

Speaker Change: IOT, we're guiding low double-digit growth and we're seeing strength across industrial edge networking and consumer.

Speaker Change: And then Auto, coming off of an extremely strong quarter in June , we're guiding flat revenue in the September quarter. And so all of these, both IoT and Automotive, are incremental to our previous expectations, and you're seeing that benefit show up in our guidance.

Chris Caso: Our next question is from the line of Chris Caso. We'll research to see if there's a question.

Operator: Our next question is from the line of Chris Caso with Wolf Research. Please answer your question.

Akash Palkhiwala: Yes, hi. I guess the first question is just a clarification on the extra week in the quarter that you referred to. Can you speak about what impact you might expect that to have on both revenue and cost. And if there's any implications on that absence of the extra week as you go into the following quarter, which is obviously a seasonally strong quarter. Yeah, sure Chris, if you think about the two factors outlined for the guidance, which is the extra week on one hand and then offset by the Huawei revenue reduction on the other side, those two largely offset each other.

Christopher Caso: Yes, hi. I guess the first question is just a clarification on the extra week in the quarter that you referred to. Can you speak about what impact you might expect it to have on both revenue and cost? And if there's any implications on that, the absence of the extra week, as you go into the following quarter, which is obviously a seasonally strong quarter?

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

Christopher Caso: Yes, hi. I guess the first question is just a clarification on the extra week in the quarter that you referred to.

Christopher Caso: Can you speak about what impact you might expect to have on both revenue and cost, and if there's any implications on that absence of the extra week as you go into the following quarter, which is obviously a seasonally strong quarter?

Akash Palkhiwala: Yeah, sure, Chris. If you think about the two factors I outlined for the guidance, which is the extra week, on the one hand, and then offset by the Huawei reduction, revenue reduction, on the other side, those two largely offset each other. And so the net impact of the write-down on our overall guidance is pretty limited when you consider the impact of both factors. Specifically, on the extra week. As you know, not all weeks are created equal as you think about the different parts of our business.

Christopher Caso: Yeah, sure, Chris. If you think about the two factors I outlined for the guidance, which is the extra week on one hand and then offset by the Huawei revenue reduction on the other side, those two largely offset each other, and so the net impact on our overall guidance is pretty limited when you consider the impact of both factors.

Akash Palkhiwala: And so the net impact on our overall guidance is pretty limited when you consider the impact of both factors. Specifically on the extra week, as you know, not all weeks are created equal as you think about the different parts of our business. So what we've factored in is incremental revenue on the QCT side, incremental Op X on the Op X side. And then within sorry incremental revenue on the QT L side and then within QCT revenue forecast and the benefit that we have from a flagship phone launch that doesn't really change based on the number of weeks.

Akash Palkhiwala: So what we factored in is incremental revenue on the QCT side, incremental OPEX on the OPEX side, and then within, sorry, incremental revenue on the QTL side. And then within QCT, revenue forecast and the benefit that we have from a flagship phone launch, that doesn't really change based on the number of weeks. So that remains largely consistent, and these factors are already included in the analysis. But the big message is when you step back and look at the two key factors I outlined, they pretty much cancel out against each other.

Christopher Caso: Specifically on the extra week, as you know, not all weeks are created equal as you think about the different parts of our business. So what we factored in is incremental revenue on the QCT side.

Speaker Change: Incremental OPEX on the OPEX side and then within, sorry, incremental revenue on the QTL side and then within QCT, revenue forecast and the benefit that we have from a flagship phone launch.

Akash Palkhiwala: So that remains largely consistent, and these factors are already included in. But kind of the big big messages, when you step back and look at the two key factors outlined, they pretty much cancel out against each other.

Speaker Change: That doesn't really change based on the number of weeks, so that remains largely consistent and these factors are already included in, but the big message is when you step back and look at the two key factors I outlined, they pretty much cancel out against each other.

Akash Palkhiwala: Okay, understood. And then moving over to QT L, you know, the guidance for the fourth quarter is outside of the range that you have been talking about before. You haven't changed your expectation for global handset units. So can you speak to the reason for the QT L guidance.

Akash Palkhiwala: Okay, understood. And then moving over to QTL, you know, the guidance for the fourth quarter is it's outside of the range that you have been talking about before; you haven't changed your expectation for global handset units. So can you speak to the reason for the QTL guidance? And if that's sustainable going forward? Because typically, the first quarter is a stronger quarter for that. Yeah, sure.

Speaker Change: Okay, understood.

Speaker Change: And then moving over to QTL, you know, the guidance for the fourth quarter, it's outside of the range that you have been talking about before. You haven't...

Akash Palkhiwala: And if that's sustainable going forward because typically the first quarter is a stronger quarter for that segment. Yeah, sure. So the QT L guidance is relatively straightforward. If you look at June to September, we typically see very small growth on a quarter-quarter basis. So we factored that in. And then we have the extra week on top of it as well, which is also factored into our numbers. So that's how we got to the number we've guiding for QT L.

Speaker Change: change your expectation for global handset units so can you speak to the the reason for the QTL guidance and if if that's sustainable going forward because typically the the first quarter is a stronger quarter for that that segment

Akash Palkhiwala: So the QTL guidance is relatively straightforward. If you look at June to September, we typically see very small growth on a quarter-over-quarter basis. So we factored that in, and then we have the extra week on top of it as well, which is also factored into our numbers. So that's how we got to the number we're guiding for QTL.

Speaker Change: Yeah, sure. So the QTL guidance is relatively straightforward. If you look at June to September , we typically see very small growth on a quarter-over-quarter basis, so we factored that in, and then we have the extra week on top of it as well, which is also factored into our numbers. So that's how we got to the number we're guiding for QTL.

Stacy Raskin: Our next questions from the line of Stacy Raskin was Bernstein Research. This is your questions.

Operator: Our next question is from the line of Stacy Rasgon with Bernstein Research. Let's just see what your question is.

Stacy Aaron Rasgon: Hi guys, thanks for taking my question. I want to ask the second half of Chris's question again that he didn't quite get to. The extra week, how should I think about the implication for December quarter seasonality coming off of that? What are you guys thinking for December, if you could help us shape that a little bit?

Stacy Raskin: Hi guys, thanks for taking my question.

Akash Palkhiwala: I want to ask the second half of Chris's question again; they didn't quite get to the extra week. How should I think about the implication for just for December quarter seasonality coming off of that. What are you guys thinking for December? If you could help us shape that a little bit.

Speaker Change: Our next question is from the line of Stacy Rasgon with Bernstein Research. Let's see if it's your question.

Stacy Aaron Rasgon: Hi guys, thanks for taking my question. I want to ask the second half of Chris's question again that you didn't quite get to. The extra week, how should I think about the implication for December quarter seasonality coming off of that? What are you guys thinking for December , if you could help us shape that a little bit?

Akash Palkhiwala: Sure, Stacy. So, as you know well, we typically grow into the first quarter, into the December quarter, and we're expecting that it's the seasonally strongest quarter of the year going forward. And as we think about the quarter, there are a couple of factors we consider. First is the launch of our new Android premium tier chip, which is going to be a tailwind for us. We do go back from 16 weeks, 14 weeks, back to 13 weeks within the quarter.

Akash Palkhiwala: Sure, Stacy. So, as you know, well, we typically grow into the first quarter into the December quarter, and we're expecting that it's the seasonally strongest quarter of the year going forward. And as we think about the quarter, there are a couple of factors we consider. First is the launch of our new Android premium tier chip, which is going to be a tailwind for us. We do go back from the 16 weeks, 14 weeks back to 13 weeks within the quarter. And we'll not have Huawei product revenue going forward, which we did have last year. So, a net of all of this, when you look at a year-over-year basis, we expect revenue to be largely, revenue growth to be largely consistent with the year-over-year growth we saw in December quarter last year.

Speaker Change: Sure, Stacy. So, as you know well, we typically grow into the first quarter, into the December quarter, and we're expecting that it's a seasonally strongest quarter of the year going forward.

Akash Palkhiwala: And then relative to last year, we'll not have Huawei product revenue going forward, which we did have last year. So, a net of all of this, when you look at a year-over-year basis, we expect revenue to be largely – revenue growth to be largely consistent with the year-over-year growth we saw in the December quarter last year.

Stacy Aaron Rasgon: That's helpful. If you could also just give us any sort of incremental color, how much of the guide actually includes TCU Avenue at this point? for next quarter.

Akash Palkhiwala: That's helpful.

Akash Palkhiwala: If you could also just give us any sort of incremental color, how much of the guide actually includes, how much of the guide is TC revenue at this point? For next quarter. And as you said, the consumer piece sounds like it's growing in IoT; that's where it is.

Speaker Change: That's helpful. If you could also just give us any sort of incremental color, how much of the guide actually includes, how much of the guide is TC revenue at this point?

Akash Palkhiwala: I know you said the consumer piece sounds like it's growing in IoT. That's where it is. But how much of it is actually PCs?

Akash Palkhiwala: But how much of it actually is PCs? Yeah, I mean, Stacy and Alkander, we have a few weeks into our launch. And so, it's too early to kind of have either a bullish assumption or a specific assumption on PC. We do have indications from our customers. And we've tried our best to factor it in as we usually do. But, as Kushano said to us, this is about kind of the longer-term growth opportunity, and being very specific on cell through in the short term is not really something that we have insight into.

Stacy Aaron Rasgon: Stacy, in all candor, we're a few weeks into our launch, and so it's too early to have either a bullish assumption or a specific assumption on PC. We do have indications from our customers, and we've tried our best to factor them in, as we usually do. But as Cristiano said to us, this is about the longer-term growth opportunity, and being very specific on sell-through in the short term is not really something that we have insight into.

Speaker Change: Yeah, I mean, Stacy, in all candor, we're a few weeks into our launch, and so it's too early to kind of have either a bullish assumption or a specific assumption on PC.

Speaker Change: We do have indications from our customers and we've tried our best to factor it in as we usually do but as Cristiano said to us this is about kind of the longer term growth opportunity and and being very specific on sell through in the short term is is is not really something that

Akash Palkhiwala: But we will, as we get to Investor Day, we're going to give a lot more disclosure and our specific plans on revenue ramp.

Stacy Aaron Rasgon: But as we get to investor day, we're going to give a lot more disclosure on our specific plans for revenue ramp-up. Our next question comes from the line of Joe Moore with Morgan Stanley. Please take the, Great, thank you. I wanted to come back to the 50% growth in China.

Cristiano Renno Amon: We have insight into, but we will, as we get to Investor Day, we're going to give a lot more disclosure on our specific plans on Revenue Ramp.

Joe Moore: Our next question comes from one of Joe Moore with Morgan Stanley.

Operator: Our next question comes from the line of Joe Moore with Morgan Stanley. Please take the question. Great, thank you. I wanted to come back to the 50%...

Cristiano Amon: Please try to handset. And it sounds like you talked about growth in the premium tier there. Can you kind of give us a sense of how much of that is price versus units? And you know, is that it's the market expanding?

Speaker Change: Our next question comes from the line of Joe Moore with Morgan Stanley . Please receive their questions.

Joe Moore: Great, thank you. I wanted to come back to the 50% growth in China handset.

Joe Moore: And it sounds like you talked about growth in the premium tier there. Can you kind of give us a sense of how much of that is price?

Cristiano Amon: And then maybe, you know, market your commentary, because your numbers seem better than your competitor. Yeah, so if you look at the total handset market, our general assumption is that from 23 to 24, it's flat to slightly up. So the market is not growing. But within that, the premium tier, the trend has been very positive. We've gone from greater than $400 representing 21% of the market now to representing 31% of the market. And so that's a very significant growth that we are benefiting from. And, as you know, we are very strong at the premium tier.

Joseph Lawrence Moore: Yeah, so if you look at the total handset market, our general assumption is that from 23 to 24, it's flat to slightly up. So the market is not growing. But within that, the premium tier, the trend has been very positive. We've gone from greater than $400, representing 21% of the market, now to representing 31% of the market. And so that's very significant growth that we are benefiting from. And, as you know, we are very strong at the premium tier. And as that market expands, we get to participate in that, not just from a revenue perspective, but from a content increase perspective as well.

Speaker Change: But within that, the premium tier, the trend has been very positive. We've gone from...

Speaker Change: Greater than $400 representing 21% of the market now to it representing 31% of the market and so that's

Cristiano Amon: And as that market expands, we get to participate in that not just from a revenue perspective, but content increase perspective as well.

Speaker Change: That's very significant growth that we are benefiting from, and as you know, we are very strong at the premium tier, and as that market expands, we get to participate in that, not just from a revenue perspective, but a content-increased perspective as well.

Unknown Executive: Okay, thank you.

Christopher Rowland: Our next questions from the line of Christopher Rowland with Susquehanna. Please just hear your questions.

Operator: Our next question is from the line of Christopher Rolland with Susquehanna. Please proceed with your questions.

Speaker Change: Thank you.

Christopher Rowland: Hey guys, thanks for the question. I guess in your latest Q, you talked about a bunch of new licenses coming up. I think they expire early fiscal 25, including Huawei. I guess, first of all, the 4G at Huawei, would this might affect these negotiations? Do you expect everyone else to sign in those negotiations as well? And then lastly, do we think about Huawei that impact as roughly 150 million a quarter? Is that a fair number on the 4G stuff from Huawei?

Christopher Adam Jackson Rolland: Hey guys, thanks for the question. I guess, in your latest queue, you talked about a bunch of new licenses coming up. I think they expire early fiscal 25, including Huawei. I guess first of all, the 4G at Huawei, would this affect these negotiations? Do you expect everyone else to sign those negotiations as well? And then lastly, do we think about Huawei, whose impact is roughly 150 million a quarter? Is that a fair number on the 4G stuff from Huawei? Thank you

Speaker Change: Hey guys, thanks for the question.

Speaker Change: I guess in your latest queue, you talked about a bunch of new licenses coming up. I think they expire early fiscal 25, including Huawei.

Speaker Change: Do we think about Huawei, that impact, as roughly $150 million a quarter? Is that a fair number on the 4G stuff from Huawei? Thank you.

Alex Rogers: Thank you.

Alexander H. Rogers: Hey Chris, this is Alex. Thanks for the question. So, if you look at the licensing progress basically over the last year or so, we set out to execute on a number of renewals and extensions, and we've done a really good job doing that. The most recent was getting Honors signed up to a long-term agreement. And then, as you know, Apple extended its reach through OEMs signed for the long term. We haven't named them, but they're significant handset manufacturers.

Alex Rogers: Hey Chris, this is Alex. Thanks for the question. So if you look at the licensing progress, basically over the last year or so, we set out to execute on a number of renewals and extensions, and we've done a really good job doing that. The most recent was getting on or signed up to a long-term agreement. And then, as you know, Apple extended through 27, but we also noted recently that we have two major Chinese OEMs signed long-term. Well, we haven't named them, but they're significant hands-on manufacturers. And then we're working through negotiations with others that we still have optimistic expectations in terms of getting them signed up.

Speaker Change: Hey Chris, this is Alex. Thanks for the question. So if you look at the licensing progress basically over the last year or so,

Speaker Change: We set out to execute on a number of renewals and extensions, and we've done actually a really good job doing that. The most recent was getting Honor signed up to a long-term agreement. And then, as you know, Apple extended through 27. But we also noted recently that we have two major Chinese...

Alexander H. Rogers: And then we're working through negotiations with others that, you know, we still have optimistic expectations in terms of getting them signed up. We also recently announced that we signed up Transient for a 5G license, and we're still negotiating with them. There's some litigation ongoing, but I think the important thing is to focus on the 5G license with that company and the ongoing negotiations. So Huawei is a company that we've been engaged with, just like the others, in terms of trying to move negotiations forward. We expect that to continue. We don't really have any news on that just yet.

Alexander H. Rogers: OEM signed long-term, we haven't named them, but they're significant handset manufacturers.

Speaker Change: And then we're working through negotiations with others that, you know, we still have optimistic expectations in terms of...

Alex Rogers: We also recently announced that we signed up Trance into a 5G license and we're still negotiating with them. There's some litigation ongoing, but I think the important thing is to focus on the 5G license with that company and the ongoing negotiations. So while we're the company that we've been engaged with, just like the others in terms of trying to move negotiations forward, we expect that to continue. We don't really have any news on that just yet. And then from a revenue breakdown perspective, as you know, we don't break down our QTL revenue by OEM. But the reasonable way of thinking about it is look at the scale of the market and the number of units and specific OEM contributes to the scale of the market and apply that to our overall revenue stream.

Speaker Change: of getting them signed up. We also recently announced that we signed up Transient to a 5G license, and we're still negotiating with them. There's some litigation ongoing, but I think the important thing is to focus on the 5G license with that company and the ongoing negotiations.

Speaker Change: So Huawei is a company that we've been engaged with just like the others in terms of trying to move negotiations forward. We expect that to continue. We don't really have any news on that just yet.

Alexander H. Rogers: And then from a revenue breakdown perspective, as you know, we don't break down our QTL revenue by OEM, but a reasonable way of thinking about it is to look at the scale of the market and the number of units any specific OEM contributes to the scale of the market and apply that to our overall revenue stream.

Speaker Change: And then from a revenue breakdown perspective as you know we don't break down our QTL revenue by OEM but but a reasonable way of thinking about it is look at the scale of the market and the number of units any specific OEM contributes to the scale of the market and apply that to our overall revenue stream.

Cristiano Amon: Our next question is from the line of Ross Seymour with Torture Bank. This is your question. Hi guys, one question won't follow up. Thanks for letting me ask him. First, one probably more for Kristiana. I just wanted to see how you feel with your leadership position on both the modem and the app's processor side in your handset business. How do you feel about the relative market share that you'll have in the penetration at given customers? There's kind of perpetual debate about what you're doing with your lead Korean customer, year-to-year, gender-gen, same thing with your modem-only customer.

Operator: Our next question is from the line of Ross Seymour with Deutsche Bank. Please proceed with your question.

Ross Clark Seymore: Hi guys, one question, and one follow-up. Thanks for letting me ask them. First, one question, probably more for Cristiano.

Speaker Change: Our next question is from the line of Ross Seymour with Deutsche Bank. Please receive your questions.

Ross Clark Seymore: I just wanted to see how you feel about your leadership position on both the modem and the applications processor side in your handset business. How do you feel about the relative market share that you'll have in the penetration of given customers? There's kind of perpetual debate about what you're doing with your lead Korean customer year-to-year, gen-to-gen, same thing with your modem-only customer. As you look forward over the next year or two, how are you feeling about the penetration that Qualcomm can have at the major customers?

Ross Seymour: Hi guys. One question, one follow-up. Thanks for letting me ask them. First, one probably more for Cristiano. I just wanted to see how you feel with your leadership position on both the modem and the apps processor side in your handset business.

Speaker Change: How do you feel about the relative market share that you'll have in the penetration at given customers? There's kind of perpetual debate about what you're doing with your lead Korean customer year-to-year, gen-to-gen. Same thing with your modem-only customer.

Cristiano Amon: So, as you look forward over the next year or two, how are you feeling about the penetration that Qualcomm can have at the major customers? All right.

Cristiano Renno Amon: All right. Thanks for your question, Ross. Lots of questions. I'm going to have to unpack them one by one.

Cristiano Amon: Thanks for your question, Ross. Loaded questions. I'm going to have to pack one by one. I think the first part of the question, how do we think about our modem technology? We feel pretty good about our modem technology. I think this is one of the core competences of the company. We continue to be the number one company in the country in number of wireless patents and standard essential patents and continue to be the company pushing forward the road map. As relates to our business with Apple, we still operate with the framework that we provided to you all.

Speaker Change: So, as you look forward over the next year or two, how are you feeling about the penetration that Qualcomm can have at the major customers?

Speaker Change: All right. Thanks for your question, Ross. Loaded questions. I'm going to have to unpack one by one.

Cristiano Renno Amon: I think the first part of the question is, how do we think about modern technology? We feel pretty good about our modern technology. I think this is one of the core competences of the company. We continue to be the number one company in the country in the number of wireless patents and extended essential patents and continue to be the company pushing for the roadmap. As relates to our business with Apple, we still operate within the framework that we provided to you all.

Speaker Change: I think the first part of the question, how do we think about modern technology?

Speaker Change: We feel pretty good about our modern technology, I think this is...

Speaker Change: One of the core competences of the company, we continue to be the number one company in the country in number of wireless patents and standard essential patents and continue to be.

Cristiano Renno Amon: I think when we extended the chipset agreement and we expect to be operating within that, we have no new update to provide. Everything above what we said before is an update. So we don't have that in our financial planning assumptions above what we had disclosed.

Speaker Change: The company pushing forward the roadmap. As relates to our business with Apple, we

Cristiano Amon: I think when we extended the chipset agreement and we expect to be operating within that, we have no new update to provide it. Everything above what we said before is an upside. So we don't have that in our financial planning assumptions above what we had disclosure. When we think about the application processor, I think the conversation is a little bit more interesting because we have always had the leadership in AI performance. We always had the leadership in sustained peak and sustained performance in mobile gaming with our in other applications with our Arduino GPU.

Speaker Change: We still operate with the framework that we provided to you all, I think when we extended the chipset agreement, and we expect to be operating within that. We have no new update to provide it. Everything above what we said before is an upside.

Cristiano Renno Amon: When we think about the application processor, I think the conversation is a little bit more interesting. Because we have always had the leadership in AI performance, we have always had the leadership in sustained, peak, and sustained performance in mobile gaming, and in other applications with our Arduino GPU, and now, for the first time in a while, we're going to have our own custom CPU, which will be announced at the Snapdragon Summit and will be in the flagship devices launching towards the end of the year and beginning of 2025.

Speaker Change: So we don't have that in our financial planning assumptions above what we had disclosure. When we think about the application processor, I think the conversation is a little bit more interesting.

Speaker Change: Because we have always had, you know, the leadership in AI performance, we always had the leadership in sustained, peak and sustained performance in mobile gaming, in other applications with our Arduino GPU.

Cristiano Amon: And now, for the first time in a while, we're going to have our own custom CPU, which you will be announced at the Snapdragon Summit and will be in the flagship devices launching towards the end of the year, beginning of 2025. So I will argue that our application processor advantage is accelerating. And as I said, in this earnings, I think the launch of the Copilot Plus PC was really graduation for Qualcomm as used to be perceived as a communications company, isn't a really a computing company. To the point that now we become the benchmark for others to follow within the PC industry.

Speaker Change: And now, for the first time in a while, we're going to have our own custom CPU, which will be announced...

Speaker Change: at the Snapdragon Summit and will be in the flagship devices.

Speaker Change: Launching towards the end of the year, beginning of 2025.

Cristiano Renno Amon: So I will argue that our application processor advantage is accelerating. And as I said in this earnings call, I think the launch of the Copilot Plus PC was really a graduation for Qualcomm, as it used to be perceived as a communications company, isn't really a computing company, to the point that now we've become the benchmark for others to follow within the PC industry. And I think that is going to be reflected in the hints as well, as we have our own custom CPU.

Speaker Change: So, I will argue that our application processor advantage is accelerating. And as I said in this earnings, I think the launch of the Copilot Plus PC was really graduation for Qualcomm.

Speaker Change: as used to be perceived as a communications company isn't really a computing company to the point that now we become the benchmark for others to follow within the PC industry.

Cristiano Amon: And I think that is going to be reflected in the hints, as well as we have our own custom CPU.

Cristiano Amon: It relates to relationship with Samsung. We have, you know, executed agreements with them. It's largely consistent to what you have seen with the launch of the GS-24. How's that going to continue? We're pretty happy with the relationship. And I think we both have a lot of opportunity with the AI coming into premium smartphones. Thank you.

Cristiano Renno Amon: As it relates to our relationship with Samsung, we have, you know, executed agreements with them. It's largely consistent with what you have seen with the launch of the GS24. How is that gonna continue? We're pretty happy with the relationship. And I think we both have a lot of opportunity with AI coming into premium smartphones. Thank you.

Speaker Change: And I think that is going to be reflected in Hintz as well, as we have our own custom CPU. As it relates to relationship with Samsung.

Speaker Change: We have, you know, executed agreements with them. It's largely consistent to what you have seen with the launch of the GS24. How's that going to continue? We're pretty happy with the relationship, and I think we both have a lot of opportunity.

Ross Clark Seymore: Thanks, Cristiano. I guess that's my follow-up question for Akash. One, in the answer to your prior question, you said that year-over-year growth in December would be about the same as it was last December. Just a clarification, was that just for QCT? And then I guess my bigger picture question: how should we think about gross margins in QCT going forward? Looks like you're implying them down a bit in the September quarter but still flat year-over-year. As the diversification process happens, such as automotive, PCs, etc., how should we think about that line in your income statement?

Akash Palkhiwala: Thanks, Cristiano. I guess that's my follow-up for Akash. One in the answer to your prior question, you said that your year-over-year growth in December would be about the same as it was last December; just a clarification.

Speaker Change: With the AI coming into premium smartphones. Thank you

Speaker Change: Thanks, Cristiano. I guess that's my follow-up.

Akash Palkhiwala: Was that just for QCT? And then I guess my bigger picture question, how should we think about gross margins in QCT going forward? Looks like you're implying them down a bit in the September quarter, but still flat year-over-year. The diversification process happens: automotive, PCs, etc.

Akash: For Akash...

Speaker Change: One, in the answer to your prior question, you said that year-over-year growth in December would be about the same as it was last December . Just a clarification, was that just for QCT? And then I guess my bigger picture question, how should we think about gross margins in QCT going forward? Looks like you're implying them down a bit in the September quarter, but still flat year-over-year. As the diversification process happens, automotive, PCs, et cetera, how should we think about that line in your income statement?

Akash Palkhiwala: How should we think about that line in your income statement? Sure. So that comment was really focused on overall company, so not just QCT, but the overall Qualcomm metrics. From a gross margin perspective, we did slightly better than we expected. We had guided in third quarter. And what we're doing is we're guiding fourth quarter in line with the guidance we had provided for third quarter. I think as you look forward beyond fourth quarter into fiscal 25, using fourth quarter as a way to model the going forward path is a reasonable way of thinking about it.

Akash Palkhiwala: Sure. So that comment was really focused on the overall company. So not just QCD, but the overall Qualcomm method. From a gross margin perspective, we did slightly better than we expected, as we had guided in the third quarter, and what we're doing is we're guiding the fourth quarter in line with the guidance we had provided for the third quarter. I think as you look forward beyond the fourth quarter into fiscal 25, using the fourth quarter as a way to model the going forward path is a reasonable way of thinking about it.

Speaker Change: Sure, so that comment was really focused on overall company, so not just QCD, but the overall Qualcomm metrics.

Speaker Change: From a gross margin perspective, we did slightly better than we expected, we had guided in third quarter, and what we're doing is we're guiding fourth quarter in line with the guidance we had provided for third quarter.

Speaker Change: I think as you look forward beyond fourth quarter into fiscal 25, using fourth quarter as a way to model the going forward path is a reasonable way of thinking about it.

Tal Liani: Our next question is from the line of Taliani with Bank of America. Please excuse your question. Hi, can you hear me? Yes, look on. Okay, perfect. Sorry.

Operator: Our next question is from the line of Tal Liani with Bank of America. I'm pleased to see you with your question.

Speaker Change: Our next question is from the line of Tal Liani with Bank of America. Pleased to see you with your question.

Tal Liani: Yes, I can. Okay, perfect. Sorry.

Cristiano Amon: So I need help to define your addressable marketing compute, meaning is it mostly about consumer laptops and the price? How do you vision your addressable market in the compute segment?

Tal Liani: Hi, can you hear me?

Tal Liani: So, I need help to define your addressable market for compute, meaning... Is it mostly about consumer laptops, or enterprise? How do you view your addressable market in the compute segment? And the second thing is you talked a lot about AI and its inclusion in headsets. But when we talk to carriers, they seem to be far away from it, in the sense that they can't find the applications yet. What do you think is gonna drive the deployment? What kind of applications, and what's the timing of applications that will drive the deployment of AI?

Speaker Change: Yes, I can.

Speaker Change: Okay, perfect, sorry.

Speaker Change: So I need help to to define your addressable marketing compute meaning

Speaker Change: Is it mostly about consumer laptops, enterprise, how do you vision your addressable market in the compute segment?

Cristiano Amon: And the second thing is you talked a lot about AI, AI inclusion in headsets. When we talk to carriers, they seem to be far away from it in a sense that they can't find the applications yet. What do you think is going to drive the deployment? What kind of applications and what's the timing of applications that will drive the deployment of AI in headsets? Thanks.

Speaker Change: And the second thing is you talked a lot about AI, AI inclusion in headsets.

Speaker Change: When we talk to carriers, they seem to be far away from it in the sense that they can't find the applications yet. What do you think is going to drive the deployment? What kind of applications and what's the timing of applications that will drive the deployment of AI enhancements?

Cristiano Amon: Hello, Tal, this is Cristiano. Thank you for your question. Let me take the first one. You should think about addressable market to fall away. First of all, it's Windows 11 addressable market. We're very focused right now on laptops. Whether it's commercial laptops for enterprise, consumer laptops. We're ranging price points, I think, especially as we talk and prepare remarks extending the roadmap from $700 and above. That's and what is defined as AIPC, a metric that I can provide to you. And I think there has been a number of OEMs indicating their respective views, but we forecast about 50% of all computers sold in 2027 will be AIPC.

Cristiano Renno Amon: Hello Tal, this is Cristiano. Thank you for your question. Let me take the first one.

Cristiano Renno Amon: You should think about the addressable market the following way. First of all, it's the Windows 11 addressable market. We're very focused right now on laptops, whether it's commercial laptops for enterprise or consumer laptops. We're arranging price points, I think, especially as we talk and prepare remarks, extending the roadmap from $700 and above and what is defined as AIPC, a metric that I can provide to you. And I think there have been a number of OEMs indicating their respective views, but we forecast that about 50% of all computers sold in 2027 will be AIPCs. That's one way to think about it.

Speaker Change: Thanks.

Speaker Change: Hello Tal, this is Cristiano. Thank you for your question. Let me take the first one.

Speaker Change: You should think about addressable market the following way. First of all, it's Windows 11.

Speaker Change: addressable market. We're very focused right now on laptops.

Speaker Change: whether it is commercial laptops for enterprise.

Speaker Change: Consumer Laptops. We're arranging price points, I think especially as we talk and prepare remarks, extending the roadmap from $700 and above.

Speaker Change: and what is defined as AIPC, a metric that I can provide to you and

Speaker Change: And I think there has been a number of OEMs indicating their respective views. But we forecast about 50% of all computers sold in 2027 will be AI PCs. That's one way to think about it. And we...

Cristiano Amon: That's one way to think about it. And we continue to basically see the transition of. As upgrades are happening to Windows 11 and Copilot, a Plus PC is an opportunity for us to participate with a highly differentiated solution.

Cristiano Renno Amon: And we continue to basically see the transition of, as upgrades are happening to Windows 11 and Copilot plus PCs, an opportunity for us to participate with a highly differentiated service. I think your second question was about AI applications for devices. So here's how you should think about it. AI is going to do on phones, whether you're going to text, whether you're going to talk, whether you're going to touch, is going to be a very important part of the human-computer interface, and this is going to start to change a lot of the user experience on apps. It's less of a carrier conversation.

Speaker Change: We continue to basically see the transition of

Speaker Change: As upgrades are happening to Windows 11 and Copilot plus PCs, an opportunity for us to participate with a highly differentiated solution.

Cristiano Amon: I think your second question was about AI applications for devices. So here's how you should think about it. AI is going to do on phones, whether you're going to text, whether you're going to talk, whether you're going to touch, is going to be a very important part of the human computer interface. And this is going to start to change a lot of the user experience on apps. It's less of a carrier conversation. It's really more of an application conversation. And those are going to start to change a lot of the use case of existing apps, or you're going to start it to see as we see the development of new agents that become that become more relevant.

Speaker Change: I think your second question...

Speaker Change: It was on the air.

Speaker Change: It was about AI applications for devices. So here's how you should think about it.

Speaker Change: AI is going to do on phones, whether you're going to...

Speaker Change: Text, whether you're going to talk, whether you're going to touch.

Speaker Change: is going to be a very important part of the human-computer interface.

Cristiano Renno Amon: It's really more of an application conversation, and those are going to start to change a lot of the use cases of existing apps, or you're going to start to see, as we see the development of new agents, those become more relevant. For example, if you are, like me, a user of WhatsApp, you're gonna see the ability within WhatsApp for you to search for Llama, for you to do different things with the model, and eventually, a lot of the models are gonna have multiple functionality across multiple apps.

Speaker Change: And this is going to start to change a lot of the user experience on apps.

Speaker Change: It's less of a carrier conversation.

Speaker Change: It's really more of an application conversation.

Speaker Change: And those are going to start to change a lot of the use case of existing apps, or you're going to start to see, as we see the development of new agents.

Cristiano Amon: For example, if you are like me, a user of WhatsApp, you're going to see the ability within WhatsApp for you to search with Lama for you to do different things with their model. And eventually, a lot of the models are going to have multiple functionality across multiple apps. The way to measure this is the number of use cases. And we're, as I said before, we're actually very happy with the trajectory. I like to compare what happened with this smartphone. When this smartphone, first it will like 10 apps, and then became 100 apps and became 1000 of apps, became hundreds of thousands of apps.

Speaker Change: They become more relevant.

Speaker Change: For example, if you are, like me, a user of WhatsApp, you're going to see the ability within WhatsApp for you to search with Llama, for you to do different things with their model and eventually a lot of the models are going to have multiple functionality across multiple apps.

Cristiano Renno Amon: The way to measure this is the number of use cases, and we're, as I said before, actually very happy with the trajectory. I like to compare it to what happened with the smartphone. With the smartphone, first there were like 10 apps, and then they became 100 apps, and became 1,000 apps, became hundreds of thousands of apps, and then it became very clear what was happening. I think we look at AI a little bit the same way.

Speaker Change: The way to measure this is the number of use cases, and we're, as I said before, we're actually very happy with the trajectory. I like to compare what happened with the smartphone. When the smartphone...

Cristiano Amon: And then it became very clear what was happening. I think we look at AI a little bit the same way. When the beginning, but we like the number of use cases increasing, and that's going to drive a lot more AI NPU performance in Silicon and hopefully continue to expand the premium and high tier. Thank you.

Speaker Change: First, there were like 10 apps, and then became 100 apps, and became thousands of apps, became hundreds of thousands of apps, and then it became very clear what was happening. I think we look at AI a little bit the same way. We're in the beginning, but we like the number of use cases increasing, and that's going to drive a lot more AI NPU performance into silicon, and hopefully continue to expand to premium and high tier.

Cristiano Renno Amon: We're in the beginning, but we like the number of use cases increasing, and that's going to drive a lot more AI NPU performance into silicon and, hopefully, continue to expand to premium and high tier. Thank you.

Tom O'malley: Our last question is from Tom O'Malley with Mark Lee. Please excuse your question. Hey guys, thanks for sneaking me in.

Operator: Our last question is from Tom O'Malley with Barclays. Please proceed with your question.

Unknown Executive: Hey guys, thanks for sneaking me in. I had one for Cristiano and one for Akash. Just very recently here, obviously in the quarter, there was a huge step up in the auto portfolio. And I think you guys did a good job of kind of describing what drove that. But you've also in your deck and kind of in your commentary talked more about AIPC being a driver. Cristiano, if you look at kind of the next 12 months, you hosted an auto analyst day, and you kind of talked about the opportunity being back-end loaded.

Cristiano Amon: I had one for Christiano and one for a cost just just very recently here. Obviously, in the quarter, there's a huge step up in the auto portfolio. And I think you guys get a good job of kind of describing what drove that. But you've also in your deck and kind of in your commentary talked more about AIPC being a driver. Christiano, if you look at kind of the next 12 months, you hosted an auto annual stay and you kind of talked about the opportunity being back and loaded. And I think the end date was kind of the late 2020s.

Speaker Change: Thank you.

Speaker Change: Our last question is from Tom O'Malley with Barclays. Please proceed with your question.

Unknown Executive: Hey guys, thanks for sneaking me in. I have one for Cristiano and one for Akash.

Speaker Change: Just set that.

Unknown Executive: Very recently here, obviously in the quarter, there's a huge step up in the auto portfolio, and I think you guys did a good job of kind of describing what drove that. But you've also, in your deck and kind of in your commentary, talked more about AIPC being a driver. Cristiano, if you look at kind of the next 12 months, you've...

Unknown Executive: And I think the end date is kind of the late 2020s. But if you look at the next 12 months, what opportunity do you think is more exciting to you, the automotive side or the IOT in terms of revenue growth? Obviously, the buckets are different sizes, but just breaking those two out as to what can drive some growth there. And then on Akash's side, if you look into Q4, you obviously have an extra week there, but you are seeing OPEX step down. Could you just walk through the moving parts that are expected to be up a little bit, just given the extra week? Thanks for all that; I appreciate it.

Cristiano Amon: But if you look at the next 12 months, what opportunity do you think is more exciting to you? The automotive side or the IoT in terms of revenue growth, obviously the buckets are different sizes, but I'm breaking those two out as to what can drive some growth there.

Speaker Change: You hosted an Auto Analyst Day, and you kind of talked about the opportunity being back-end loaded, and I think the end date was kind of the late 2020s, but if you look at the next 12 months, what opportunity do you think

Akash: is more exciting to you, the automotive side or the IOT in terms of revenue growth? Obviously, the buckets are different sizes, but just breaking those two out as to what can drive some growth there. And then on Akash's side, if you look into Q4, you obviously have an extra week there, but you are seeing OPEX step down. Could you just walk through the moving parts that are expected to be up a little bit, just given the extra week? Thanks for all that. Appreciate it, guys.

Akash Palkhiwala: And then on a caution side, if you look into Q4, you obviously have an extra week there. But you are seeing off-ex step down. Could you just walk through the moving parts that are expected to be up a little bit just given the extra week. Thanks for all that. Appreciate it, guys.

Cristiano Amon: Thank you, Tom. Actually, I appreciate the question. I really like the question to give me an opportunity to explain this.

Cristiano Renno Amon: Thank you, Tom. Actually, I appreciate the question. I really like the question. You give me an opportunity to explain this. You should think of Qualcomm, or not; we're not just trying to build one big business of differentiation, or actually, we're building a number of businesses, I'm sorry, of diversification. We're really focused. And when we talk about Auto Investor Day, that was in September 2022, we kind of outline how that is going to be turning into a big platform for Qualcomm and building into the financials. And hopefully, you can see now, especially in this quarter, how that's materialized. And that will continue. That's not going away.

Cristiano Amon: You should think of Qualcomm or not. We're not just trying to build one big business of differentiation; actually, we're building a number of businesses. I'm sorry of diversification. We're really focused on this. And when we talk about Auto Investor Day, that was in September 2022. We kind of outline how that is going to be turning into a big platform for Qualcomm and building into the financials. And hopefully you can see now, especially with this quarter, how that's materializing. And that will continue. That's not going away. We expect, you know, given the size of our pipeline, we talk about 4 billion and 26.

Speaker Change: Thank you, Tom. Actually, I appreciate the question. I really like the question. It gives me an opportunity to explain this.

Speaker Change: You should think of Qualcomm or not, we're not just trying to build one big business of differentiation or actually we're building a number of business, I'm sorry, of diversification. We're really focused on this.

Speaker Change: And when we talk about Auto Investor Day, that was actually in September 2022, we kind of outline how that is going to be turning into.

Cristiano Renno Amon: We expect, you know, given the size of our pipeline, we're talking about $4 billion in 2026. We're talking about $9 billion towards the end of the decade. And we're on track to do that. But the second one is PCs.

Speaker Change: into a big platform for Qualcomm and building to the financials and hopefully you can see now, especially with this quarter, how that's materializing.

Speaker Change: And that will continue, that's not going away. We expect, you know, given the size of our pipeline, we talk about $4 billion in 2026, we talk about $9 billion towards the end of the decade, we're on track to do that. But the second one is PCs.

Cristiano Amon: We talk about 9 billion towards the end of the decade. We're in track to do that.

Cristiano Renno Amon: And as we get it, it's early. As I said, we're very happy. It's exceeding our expectations. Some models are sold out.

Cristiano Amon: But the second one is PCs. And as we get, it's early; as I said, we're very happy it is exceeding our expectations. Some models sold out with just launch. I think when we get to the investor date, we probably will feel comfortable putting a metric out there of what that's going to represent and how that's going to grow over time when we think about a total contribution to Qualcomm. That's one they're very excited, but we don't stop there.

Cristiano Renno Amon: We just launched, and I think when we get to the investor date, we probably will feel comfortable putting a metric out there of what that's going to represent and how that's going to grow over time when we think about a total contribution to Qualcomm. That's one we're very excited about. But we don't stop there. The next one, and I encourage you all to see what we're going to do next quarter. I think AI and computing are driving the industrial roadmap for Qualcomm.

Speaker Change: And as we get, it's early, as I said, we're very happy, it's exceeding our expectations, some models sold out.

Speaker Change: We just launched.

Speaker Change: I think when we get to the investor day, we probably will feel comfortable.

Speaker Change: Put a metric out there of what that's going to represent and how that's going to grow over time when we think about a total contribution to Qualcomm. That's one they're very excited. But we don't stop there. The next one, I and I encourage you all to

Cristiano Amon: The next one I and I encourage you all to do what we're going to do next quarter. I think AI and computing, it's driving the industrial roadmap towards Qualcomm. So we were completely redesigning our industrial roadmap, and we're going to unveil that roadmap in the coming months. So we think about this as there are many markets that can benefit from technology. We're super focused on growth and diversification. And it's about a number of bets, not just one bet.

Cristiano Renno Amon: So we're completely redesigning our industrial roadmap, and we're going to unveil that roadmap in the coming months. So we think about this as there are many markets that can benefit from technology. We're super focused on growth and diversification, and it's about a number of bets, not just one bet. Thank you.

Speaker Change: So what we're going to do next quarter, I think AI and computing, it's driving the industrial roadmap.

Speaker Change: So we're completely redesigning our industrial road map, and we're going to unveil that road map in the coming months. So we think about this as...

Speaker Change: There are many markets that can benefit from technology. We're super focused on growth and diversification, and it's about a number of bets, not just one bet. Thank you.

Akash Palkhiwala: Thank you. And Tom, on your second question in OPEX, we had some non-labor material related spend and tape out related spend in the third quarter, which is why third quarter OPEX was higher, and it goes down into the fourth quarter despite the extra week. And so it's just timing of non-labor spend that drove it, but fundamentally no change in kind of the way we are managing OPEX. We're very committed to operating discipline, and hiring, even when we do it, is very focused on specific new skills that are required for diversification. So you won't see a difference in the way we are managing the OPEX for the company.

Unknown Executive: And Tom, on your second question about OPEX, we had some non-labor material-related spend and tape-out-related spend in the third quarter, which is why third-quarter OPEX was higher, and it goes down into the fourth quarter despite the extra week. And so it's just the timing of non-labor spend that drove it.

Speaker Change: And Tom, on your second question in OPEX, we had some non-labor material related spend and tape out related spend in the third quarter, which is why third quarter OPEX was higher and it goes down into the fourth quarter despite the extra week.

Akash Palkhiwala: But fundamentally, no change in the way we are managing OPEX. We're very committed to operating discipline and hiring. Even when we do it, it is very focused on specific new skills that are required for diversification. So you won't see a difference in the way we are managing our OPEX for the company.

Speaker Change: And so, it's just timing of non-labor spend that drove it, but fundamentally, no change in kind of the way we are managing OPEX.

Speaker Change: very committed to operating discipline and hiring. Even when we do it, it is very focused on specific new skills that are required for diversification. So you won't see a difference in the way we are managing the OPEX for the company.

Unknown Executive: Thank you.

Mauricio Lopez: Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call?

Mauricio Lopez: That concludes the question-and-answer session.

Operator: Mr. Amon, do you have anything further to add before adjourning the call? No, I just want to just quickly thank all of our partners, or suppliers, or employees for a great job on a PC execution. I think we're very proud of what we accomplished. We'll continue to drive AI across edge one of our business. We feel we have a very unique position in the ability to run AI at the edge. We're very happy with the automotive traction, and we're actually looking forward to the next generation of products launching in the coming months. As I said, hopefully creating a new vector for growth of the company in the future in industrial IoT.

Cristiano Renno Amon: I just want to quickly thank all of our partners, our suppliers, and our employees for a great job on the PC execution. I think we're very proud of what we accomplished. We'll continue to drive AI across each one of our businesses. We feel we have a very unique position in the ability to run AI at the edge. We're very happy with the automotive traction, and we're actually looking forward to the next generation of products launching in the coming months. As I said, hopefully, creating a new vector for growth for the company in the future in industrial IoT. Thank you very much.

Speaker Change: Thank you. That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call?

Cristiano Renno Amon: No, I just want to just quickly.

Speaker Change: Thank all of our partners.

Speaker Change: Our suppliers, our employees.

Speaker Change: for a great job on a PC execution. I think we're very proud of what we accomplished.

Speaker Change: We'll continue.

Speaker Change: to drive AI across.

Speaker Change: H1 of our business. We feel we have a very unique position in the ability to run AI at the edge. We're very happy with the automotive traction and we're actually looking forward to the next generation of products launching coming months, as I said, hopefully creating a new vector.

Operator: Thank you very much.

Please, gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Speaker Change: for growth of the company in the future in industrial IoT. Thank you very much.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.