Q1 2025 Qualcomm Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by welcome.
Operator: Welcome to the Qualcomm first quarter fiscal 2025 earnings conference call.
Welcome to the Qualcomm first quarter fiscal 2025 earnings conference call.
Operator: Next time, all participants are in listen-only mode. Later we'll conduct a question and answer session. If you'd like to ask a question during this time, press star then the number 1 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.
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 this time press. The Star then the number one on your telephone keypad.
To withdraw your question press the Star then the number two.
If you're using a speaker phone please pick up your handset before pressing the numbers.
Please limit your questions to one question and one follow up.
Operator: And a reminder, this conference is being recorded February 5th, 2025. Playback number for today's call is 877-660-6853. International callers, please dial 201 612-7415. Playback Reservation Number is 137-50-899.
As a reminder, this conference is being recorded February 5th 2025.
Playback number for today's call is 8776606853.
International callers, please dial 201.
612 <unk>.
7415.
The playback reservation number is 13750 899.
Mauricio Lopez: I would now like to turn the call over to Mauricio Lopez-Edoyon, Vice President of Investor Relations.
Speaker Change: I would now like to turn the call over to Mauricio Lopez civilian Vice President of Investor Relations.
Alicia Lopenza-Doyne: Alicia Lopenza-Doyne, please go ahead.
Duane: Duane Please go ahead.
Alicia Lopenza-Doyne: 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.
Speaker Change: Thank you and good afternoon, everyone. Today's call will include prepared remarks by Christiane them on and of course Pago wallet. In addition, Alex Rogers will join the question and answer session.
Alicia Lopenza-Doyne: 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.
Speaker Change: You can access our earnings release and a slide presentation that accompany 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.
Alicia Lopenza-Doyne: 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. Actual events or results could differ materially from those projected in our forward-looking statement.
During the call today, we will use non-GAAP financial measures as defined in regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward looking statements, including projections and estimates of future events business or industry trends or business or financial results.
Speaker Change: Actual events or results could differ materially from those projected in our forward looking statements.
Alicia Lopenza-Doyne: Please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ maturely from the forward-looking statement.
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.
Mauricio Lopez: And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon.
Speaker Change: And now to comments from Qualcomm's, President and Chief Executive Officer Christiana Mall.
Cristiano Amon: Thank you, Mauricio.
Speaker Change: Thank you Mauricio and good afternoon, everyone. Thanks for joining us today in fiscal Q1, we delivered record revenue of $11.7 billion and non-GAAP earnings per share of $3.41 or.
Cristiano Amon: And good afternoon, everyone. Thanks for joining us today. In Fiscal Q1, we delivered record revenues of $11.7 billion in non-GAAP earnings per share of $3.41. Our chipset business achieved record revenues of $10.1 billion, the first $10 billion quarter for QCT, including record quarterly handset and automotive revenues. Licensing business revenues were $1.5 billion. We're off to a great start in fiscal 25. Our mobile roadmap is the strongest in our history with exceptional traction for Snapdragon in premium tier handsets, and we are delivering growth across our diversification initiative. This quarter, automotive and IOT revenues grew 61% year-over-year and 36% year-over-year, respectively.
Speaker Change: Our chipset business achieved record revenues of $10 $1 billion, the first $10 billion quarter for Q T, including record quarterly handset and automotive revenues licensing business revenues were $1 $5 billion.
Speaker Change: We're off to a great start in fiscal 'twenty five our mobile roadmap is the strongest in our history with exceptional traction for snapdragon in premium to your handsets and we are delivering growth across our diversification initiatives. This quarter more of an Iot revenues grew.
Speaker Change: 61% year over year, and 36% year over year, respectively were committed to achieving $22 billion on non handset revenues by 2029 S outlined Dora 2020 for Investor Day.
Cristiano Amon: We are committed to achieving $22 billion on non-enhanced revenues by 2029 as outlined through our 2024 Investor Day. Our advanced connectivity, computing and edge AI technologies and product portfolio continue to be highly differentiated and increasingly relevant to a broad range of industries. We also remain very optimistic about the growing edge AI opportunity across our business, particularly as we see the next cycle of AI innovation and scale. DeepSeq R1 and other similar models recently demonstrated the AI models are developing faster, becoming smaller, more capable and efficient, and now able to run directly on device. In fact, DeepSeq R1 distilled models were running on Snapdragon-powered smartphones and PCs within just a few days of its release.
Speaker Change: Our advanced connectivity computing and edge AI technologies and product portfolio continued to be highly differentiated and increasingly relevant to a broad range of industries. We also remain very optimistic about the growing edge AI opportunity across our business.
Speaker Change: Particularly as we see the next cycle of AI innovation and scale.
Speaker Change: Deep seek our one and other similar models recently demonstrated the AI models are developing faster, becoming smaller more capable inefficient and now able to run directly on device in fact deep sick or one that's still models, we're running on snapdragon.
Speaker Change: Powered smartphones mpc's within just a few days of its release.
Cristiano Amon: As we enter the era of AI inference, we expect that while training will continue in the cloud, inference will run increasingly on device, making AI more accessible, customizable, and efficient. This will encourage the development of more targeted, purpose-oriented models and applications which we anticipate will drive increased adoption, and in turn, demand for Qualcomm platforms across a range of devices. With the industry's most powerful and efficient AI processors for the edge, we're well positioned to drive this transition and benefit from this upcoming inflection.
Speaker Change: As we entered the era of AI inference, we expected while training will continue into cloud inference will run increasingly on device, making AI more accessible customizable inefficient.
Speaker Change: This will encourage the development or more targeted purpose oriented models and applications, which we anticipate will drive increased adoption and in turn demand for Qualcomm platforms across a range of devices.
Speaker Change: With the industry's most powerful inefficient AI processors for D edge, we're well positioned to drive this transition and benefit from this upcoming inflection point.
Cristiano Amon: Let me now share some key highlights from the business. In handsets, we're pleased that the recently launched Samsung Galaxy S25 series of smartphones will be powered by the Snapdragon 8 Elite for Galaxy Global. The Snapdragon 8 Elite 4 Galaxy delivers the latest AI experiences, showcasing one of the best integrations of Galaxy AI and Google Gemini. We are encouraged by the number of AI features, which has nearly doubled in the Galaxy S25 series. We expect the strand to continue as part of the transition to AI smartphones. We're extremely proud of this launch and our longstanding strategic partnerships with Samsung and Google.
Speaker Change: Now share some key highlights from the business.
Speaker Change: In handsets, we're pleased at the recently launched Samsung Galaxy S. Twenty-five series of smartphones will be powered by the Snapdragon eight elite for Galaxy globally.
Speaker Change: The snapdragon eight elite for Galaxy delivers the latest AI experiences showcasing one of the best integrations of Galaxy AI and Google with Gemini. We are encouraged by the number of AI features which has nearly doubled in the Galaxy S. 25 series, we expect this strength to continue.
Speaker Change: Q as part of the transition to AI smartphones, we're extremely proud of this launch and our longstanding strategic partnerships with Samsung and Google as a reminder, the snapdragon eight elite is our most powerful mobile platform to date, featuring the industry's fastest custom CPU.
Cristiano Amon: As a reminder, the Snapdragon 8 Elite is our most powerful mobile platform today, featuring the industry's fastest custom CPU, the most powerful NPU, incredible GPU performance, and the best camera. In addition to Samsung, we're very pleased with the design traction and strong end-customer demand for recently launched Snapdragon 8 Elite Power flagship smartphones by Chinese OEM. Our design win momentum in PCs has also increased, with more than 80 designs in production or development on our category-leading Snapdragon X series platforms, and we're targeting more than 100 designs to be commercialized through 2026. Importantly, we recently announced our newest compute platform, the Snapdragon X, specifically designed to address PCs in the $600 price range, further expanding our addressable opportunities.
Speaker Change: The most powerful N P U incredible GPU performance and the best camera.
Speaker Change: In addition to Samsung, we're very pleased with the design traction and strong and customer demand for recently launched Snapdragon eight elite power flagship smartphones by Chinese Oems.
Speaker Change: Our design win momentum in Pcs has also increased with more than 80 designs in production or development on our category, leading Snapdragon X series platforms, and we're targeting more than 100 designs to be commercialized through 2026 importantly, we recently announce.
Speaker Change: Our newest compute platform the Snapdragon X specifically designed to address Pcs in the $600 price range further expanding our addressable opportunity.
Cristiano Amon: Snapdragon X features best-in-class performance, multi-day battery life, powerful on-device AI, and Copilot Plus experiences. We look forward to PCs powered by Snapdragon X from leading OEMs including Acer, Asus, Dell, HP, and Lenovo in the coming months. In partnership with Lenovo, we introduced the world's first mini-desktop AI PCs powered by the Snapdragon X series. These devices redefine compact computing in a new form factor ideal for developers, consumers, and enterprises. The number of NPU-powered on-device AI experiences running natively on Snapdragon has continued to grow with more than 50 AI applications now optimized for Windows 11, including apps for enterprise collaboration, productivity, creativity, and more.
Speaker Change: Nap Dragon X features best in class performance Multiday battery life powerful on device AI copilot plus experiences we look forward to Pcs powered by Snapdragon X from leading Oems, including ASER, a sous Dell HP and Lenovo in the coming months.
Speaker Change: In partnership with Lenovo, We introduced awards first mini desktop AIP seats powered by the Snapdragon X series.
Speaker Change: As devices redefined compact computing in a new form factor ideal for developers consumers and enterprises.
Speaker Change: The number of N. P. You powered one device AI experiences running natively on Snapdragon has continued to grow with more than 50 AI applications now optimized for Windows 11, including apps for enterprise collaboration productivity creativity and more.
Cristiano Amon: Microsoft also announced it is bringing NPU optimized versions of DeepSeek R1 directly to Copilot Plus PCs, beginning with the Qualcomm Snapdragon X series. Additionally, the broader app ecosystem continues to expand with Snapdragon native apps now including 20 of the most popular VPNs, 50 of the most popular security and cloud storage apps, as well as new applications for creators. While we're still in the early phase of the transition to Copilot plus PCs, we are pleased with consumer reception for Snapdragon X series, which has exceeded our expectations. According to Circona, in December, Snapdragon X series had more than 10% share of the greater than $800 Windows laptops in US retail.
Speaker Change: Microsoft also announced it is bringing N P. You optimize versions of deep seek our one directly to co pilot plus species, beginning with the Qualcomm Snapdragon X series.
Speaker Change: Additionally, the broader App ecosystem continues to expand with Snapdragon native apps snow, including 20 of the most popular Vpns 50 are the most popular security and cloud storage apps as well as new applications for creators.
Speaker Change: While we're still in the early phase of the transition to co pilot plus species. We are pleased with consumer reception for our Snapdragon X series, which has exceeded our expectations. According to Sir Kana in December Snapdragon X series had more than 10.
Speaker Change: Percent share of the greater than $800 window and laptops in U S retail.
Cristiano Amon: In XR, we remain the preferred solutions provider for VR, MR and AR across major OEMs and ecosystems and our strategic long term collaborations with Meta and other key partners are playing a key role in growing this area. The Snapdragon-based Ray-Ban Metaglasses continue to exceed expectations as they adopt more AI features. We remain optimistic that we are at the beginning of an inflection point for smart glasses to gain scale as they become wearable AI. Additionally, at the recent XR Unlocked event, Google announced Android XR and we are pleased that the first device available for purchase later this year will be built by Samsung and powered by the Snapdragon XR platform.
Speaker Change: In XR, we remained the preferred solutions provider for V. R. M. R. N E R across major Oems and ecosystems, and our strategic long term collaborations with meta and other key partners are playing a key role in growing desert area. They.
Speaker Change: The Snapdragon base Ray ban meta glasses continue to exceed expectations as they adopt more AI features we remain optimistic that we are at the beginning of an inflection point for smart glasses to gain scale as they become wearable AI.
Speaker Change: Additionally, at the recent XR unlocked event, Google announced Android XR and we're pleased that the first device available for purchase later this year will be built by Samsung and power by the Snapdragon XR platform.
Cristiano Amon: We continue to expand our industrial IoT portfolio of products and solutions and we are encouraged by the positive reception across multiple industry verticals, including energy and utilities, robotics, manufacturing, warehousing and logistics, retail, enterprise and commercial. At CES, we introduce our AI on-prem appliance and inference suite, which enables generative AI inference in computer vision workloads to run on dedicated on-premises hardware, allowing sensitive customer data, fine-tuned models, and inference loads to remain within the enterprise. The AI Inference Suite provides ready-to-use AI applications and agents, tools, and libraries to easily operationalize AI and Gen-AI applications in a variety of deployments, on-premise or in the cloud.
Speaker Change: We continue to expand our industrial Iot portfolio of products and solutions and we are encouraged by the positive reception across multiple industry verticals, including energy and utilities robotics manufacturing warehousing and logistics retail enterprise and commercial S.
Speaker Change: Yes, we introduced our AI on Prem appliance in infants suite, which enables generative AI inference and computer vision workloads to run on dedicated on premises hardware, allowing sensitive customer data fine tuned models and in French loads to remain within the enterprise.
Speaker Change: The AI inference suite provides ready to use AI applications and agents tools and libraries to easily operationalize AI engine AI applications in a variety of deployments on premise or in the cloud our first wave partners for this new platforms include Honeywell I B M.
Cristiano Amon: Our first wave partners for these new platforms include Honeywell, IBM, and Otter.
Speaker Change: In others, we also announced the next evolution of Qualcomm aware, our cloud base asset visibility platform.
Cristiano Amon: We also announced the next evolution of Qualcomm Aware, our cloud-based asset visibility platform. As a horizontal enablement platform, Qualcomm Aware allows for a highly integrated way to add cloud-based observability and insights, geolocation, fine indoor positioning, firmware updates, and device management services to connected devices.
Speaker Change: Horizontal enablement platform caulking aware allows for a highly integrated way to add cloud base observe ability and insights geolocation fine indoor positioning farmer updates and device management services to connected devices.
Cristiano Amon: In edge networking, we're pleased with the momentum in Wi-Fi 7 with recent product launches from Cisco, Charter, Eero, Netgear, Nokia, and Ubiquiti. We're also seeing strong traction for 5G fixed wireless access with next generation design wins at operators in North America and India.
Speaker Change: In etch networking, we're pleased with the momentum in Wi Fi seven with recent product launches from Cisco charter Euro net year, Nokia and ubiquity. We're also seeing strong traction for our five <unk> fixed wireless access with next generation design wins at operators in North America and Indy.
Speaker Change: Yeah.
Cristiano Amon: We continue to strengthen our position in automotive as the industry's leading technology partner for the software-defined vehicle, AI-powered in-cabin systems, advanced driver assistance, and connected car experience. At CES, we announced new collaborations with Alpine, Amazon, Google, LeapMotor, Mahindra, and Hyundai Mobis, which will use Snapdragon digital chassis solutions to drive AI-powered in-cabin and advanced driver assistance systems. We also expanded our partnerships with several tier one suppliers to now utilize the Snapdragon cockpit elite platform, including with Panasonic Automotive Systems, Garmin, and DSA SV. These collaborations will bring advanced intelligence, including generative AI, to all levels of software-defined vehicles, enabling automakers to build safe and extraordinary user experience.
Speaker Change: We continue to strengthen our position in automotive as the industry's leading technology partner for the software defined vehicle AI powered in cabin systems advanced driver assistance and connected car experiences.
Speaker Change: At CES, we announced new collaborations with Alps, Alpine Amazon, Google Leap motor Mahindra and human Die movies, which will use the snapdragon digital chassis solutions to drive AI powered in cabin and advanced driver assistance systems.
Speaker Change: We also expanded our partnerships with several tier one suppliers to now utilize their snapdragon cockpit elite platform, including with Panasonic automotive systems, Garmin and D say S fee.
Speaker Change: This collaboration will bring advanced intelligence, including generative AI to all levels of software defined vehicles, enabling automakers to build safe and extra ordinary user experiences. We're very pleased with the strong industry reception to snapdragon cockpit elite platform since its launch late.
Cristiano Amon: We're very pleased with the strong industry reception to Snapdragon Cockpit Elite platform since its launch late last year. Our new collaboration with Hyundai Mobis will combine the Snapdragon Ride Flex system on chip and the Snapdragon Ride automated driving stack with Hyundai Mobis cutting-edge software and SIMs. This will deliver a comprehensive system solution that powers advanced infotainment and advanced driver assistance systems, bringing a one-of-a-kind user experience to future vehicles. Another significant milestone was the launch of the Snapdragon Digital Chassis Workbench, a cloud-based workflow for developers building the software-defined vehicle. To complement the hardware and software of the Snapdragon Digital Chassis, Workbench provides a complete development and test environment to build and deploy automotive applications.
Speaker Change: Last year.
Speaker Change: Our new collaboration with Hyundai movies will combine the snapdragon ride flex system on chip and the Snapdragon ride automated driving stack with Hyundai movies cutting edge software and sensors.
Speaker Change: This will deliver a comprehensive system solution that powers advanced infotainment and advanced driver assistance systems, bringing our one of a kind user experience to future vehicles.
Speaker Change: The other significant milestone was the launch of the Snapdragon digital chances workbench, a cloud based workflow for developers building the software defined vehicle to complement their hardware and software of the Snapdragon digital chassis workbench provides a complete development and test environment.
You build and deploy automotive applications.
Cristiano Amon: Finally, we remain very pleased with the execution of our QTL business in recent years and we're well positioned to maintain fiscal 24 revenue scale going forward. Over the past year, we've extended key agreements with major OEMs and we're poised to shortly execute new long-term license agreements with two additional large OEMs. We also recently signed Transient to a long-term 4G license to go along with the 5G license signed in the last fiscal year. Our progress reaffirms QTL as the industry's most extensive licensing program of cellular essential packages.
Speaker Change: Finally, we remain very pleased with the execution of our QTL business in recent years, and we're well positioned to maintain fiscal 'twenty four revenue scale going forward.
Speaker Change: Over the past year, we've extended key agreements with major Oems and we're poised to shortly execute new long term license agreements with two additional large Oems.
Speaker Change: We also recently signed trenching to a long term for G license to go along with the five G license signed in the last fiscal year, our progress reaffirms QTL is the industry's most extensive licensing program of seller essential patents.
Cristiano Amon: Before I turn the call over to Akash, I would like to provide an update on the ARM vs. Qualcomm trial from December 2024. The jury's verdict vindicated Qualcomm's CPU innovations and affirmed that Qualcomm's contract with ARM provides a license for Qualcomm's products containing our proprietary Orion CPUs in industries such as smartphones, automotive, next-generation PCs, IoT, and data centers. In addition, ARM recently notified us that it was withdrawing its October 22, 2024 Notice of Breach and indicated that it has no current plan to terminate the Qualcomm Architecture License Agreement. We're excited to continue to develop performance-leading, world-class products that benefit consumers worldwide that include our incredible Orion custom CPUs.
Speaker Change: Before I turn the call over to walk us I would like to provide an update on the arm versus Qualcomm trial from December 2020 for.
Speaker Change: The jury's verdict vindicated qualcomm's CPU innovations and affirm the qualcomm's contract with arm provides a license for qualcomm's products containing our proprietary Orion Cpus in industries, such as smartphones automotive next generation P. CS Iot.
Speaker Change: <unk> and data center.
Speaker Change: In addition arm recently notified us that it was withdrawing its October 22nd 2024 notice of breach and indicated that he has no current plan to terminate the Qualcomm architecture license agreement.
Speaker Change: We're excited to continue to develop performance, leading world class products that benefit consumers worldwide that include our incredible Orion custom Cpus I will now turn the call to our cash.
Akash Palkhiwala: I will now turn the call to Akash.
Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. I'll start with a summary of our record performance in the first fiscal quarter. We are pleased to announce revenues of $11.7 billion and non-gap EPS of $3.41, both of which were above the high end of our guidance. QTL revenues of $1.5 billion and EBT margin of 75% were in line with expectations. QCT delivered record revenues of $10.1 billion, which was above the high end of our guidance on outperformance across Android handsets, IoT, and automotives. QCT handset revenues were a record $7.6 billion, with 13% year-over-year growth, reflecting higher volume and content increase in Android Premium tier, given by industry-leading performance of our newly launched Snapdragon 8 Elite platform.
Speaker Change: Thank you Cristiano and good afternoon, everyone.
I'll start with a summary of our record performance in the first fiscal quarter.
Speaker Change: We're pleased to announce revenues of $11 7 billion and non-GAAP EPS of $3 41.
Speaker Change: Both of which were above the high end of our guidance.
Speaker Change: QTL revenues of $1 $5 billion and EBT margin of 75% were in line with expectations.
Speaker Change: <unk> delivered record revenues of $10 $1 billion, which was above the high end of our guidance on outperformance across Android handsets Iot and automotive.
Speaker Change: <unk> handset revenues were a record $7 $6 billion with 13% year over year growth, reflecting higher volume and content inquiries and Android premium dear driven by industry, leading performance of our newly launched Snapdragon eight elite platform.
Akash Palkhiwala: Higher volume in Android Premium tier in the quarter was driven by stronger end consumer demand for recently launched flagship smartphones and global share in Samsung Galaxy S25 devices. UCT IoT revenues of $1.5 billion increase 36% year over year, driven by new product launches with our industry leading processors and on device AI capability across consumer networking and industry. We delivered our sixth consecutive quarter of record QCT automotive revenues of $961 million, representing 61% year-over-year growth on continued content increase in new vehicle launches as automakers deploy our high-performance, low-power computing and connectivity chips to bring next-generation experiences to consumers.
Speaker Change: Higher volume and Android premium tier in the quarter was driven by stronger and consumer demand for recently launched flagship smartphones and global share in Samsung Galaxy S twenty-five devices.
Speaker Change: Do you see the Iot revenues of one $5 billion increased 36% year over year, driven by new product launches with our industry, leading processors and on device AI capability across consumer networking and industrial.
Speaker Change: We delivered our sixth consecutive quarter of record Q city automotive revenues of $961 million, representing 61% year over year growth on continued content inquiries in new vehicle launches as automakers deploy our high performance low power computing and connectivity chips to bring next generation experiences to consumers.
Akash Palkhiwala: QCT-EBT margins of 32% exceeded the high end of our guidance, reflecting the benefit of revenue upside and operating leverage. QCT-EBT dollars of $3.2 billion increased by 25% versus the year-ago period.
Speaker Change: <unk> EBT margins of 32% exceeded the high end of our guidance, reflecting the benefit of revenue upside and operating leverage Qcd EBT dollars of $3 2 billion increased by 25% versus the year ago period.
Akash Palkhiwala: Lastly, we return $2.7 billion to stockholders, including $1.8 billion in stock repurchases and $942 million in dividends.
Speaker Change: Lastly, we returned $2 7 billion to stockholders, including $1 8 billion in stock repurchases and 942 million in dividends.
Akash Palkhiwala: Now turning to God. For the second fiscal quarter, we are forecasting non-gap revenues of $10.2 to $11 billion and non-gap EPS of $2.70 to $2.97. In QTL, we estimate revenues of $1.25 to $1.45 billion, and EBT margins of 69% to 73%, reflecting normal seasonality for headset units. In QCT, we expect revenues of $8.9 to $9.5 billion and EBT margins of 29% to 31% with strong year-over-year growth across handsets, IoT, and automotive. We expect QCT handset revenues to grow by approximately 10% on a year-over-year basis, including the benefit of increased shipment for Samsung Galaxy S25 smartphones.
Speaker Change: Now turning to guidance.
Speaker Change: For the second fiscal quarter, we are forecasting non-GAAP revenues of $10.2 billion to $11 billion and non-GAAP EPS of $2 70 to $2 90.
Speaker Change: In QTL, we estimate revenues of 1.25 to $1 $45 billion, and EBT margins of 69% to 73%, reflecting normal seasonality foreheads tied to units.
Speaker Change: In <unk>, we expect revenues of eight 9% to $9 $5 billion and EBT margins of 29% to 31% with strong year over year growth across handsets, Iot and automotive <unk>.
Speaker Change: We expect the <unk> handset revenues to grow by approximately 10% on a year over year basis, including the benefit of increased shipment for Samsung Galaxy S twenty-five smartphones.
Akash Palkhiwala: On a sequential basis, the decline in QCT handset revenues is primarily driven by seasonality in shipments to Apple. We expect IoT and automotive revenues to grow by approximately 15% and 50% respectively versus the year ago period, driven by the strong product momentum I just outlined. Lastly, we estimate non-GAAP operating expenses to be approximately $2.25 billion.
Speaker Change: On a sequential basis the decline in <unk> handset revenues is primarily driven by seasonality and shipments to Apple.
Speaker Change: We expect the Iot and automotive revenues to grow by approximately 15% and 50% respectively versus the year ago period, driven by the strong product momentum I just outlined.
Speaker Change: Lastly, we estimate non-GAAP operating expenses to be approximately 2.25 billion.
Akash Palkhiwala: In closing, we are very pleased with our strong first quarter results, with new records across the following metrics. Total Company Revenue, Non-Gap EPS, QCT Revenues, QCT Handset Revenues, and QCT Automotive Revenues. In QTL, we finalized renewal negotiations for long-term licenses with two key Chinese OEMs and expect to execute those agreements shortly. We also recently signed Transient to a long-term 4G license, in addition to the 5G license signed in the last fiscal year. With these additional long-term agreements, we expect Fiscal 25 QTL revenues to be consistent with Fiscal 24. Our recent product announcements at CES across PC, Automotive, Consumer, and Industrial IoT, along with the continued performance leadership in premium-tier Android handsets, underscore our position as the connected computing leader across edge devices.
Speaker Change: In closing, we're very pleased with our strong first quarter results with new records across the following metrics total company revenue non-GAAP EPS Qcd revenues Qcd handset revenues and QC the automotive revenues.
Speaker Change: In QTL, we finalized renewal negotiations for long term licenses with two key Chinese Oems and expect to execute those agreement shortly.
We also recently signed transition to a long term for G license. In addition to the five G license signed in the last fiscal year.
With these additional long term agreements, we expect fiscal 'twenty five QTL revenues to be consistent with fiscal 'twenty four.
Speaker Change: Our recent product announcements at CES across PC automotive consumer and industrial Iot along with the continued performance leadership in premium tier Android handsets underscore our position as the connected computing leader across edge devices.
Akash Palkhiwala: Lastly, as AI approaches an inflection point of scaling at the edge, our leadership in high performance on-device inference solutions positions us to benefit as we lead this transition.
Speaker Change: Lastly, as AI approaches an inflection point of scaling at the edge, our leadership and high performance on device inference solutions positions us to benefit as we lead this transition.
Akash Palkhiwala: This concludes our prepared remarks.
Mary Sue: This concludes our prepared remarks back to you Mary Sue.
Mauricio Lopez: Back to you, Mauricio.
Operator: Operator, we are now ready for questions. Thank you. If you have a question press star then the number one. To withdraw your question, press star 2. If you're using a speakerphone, please pick up your handset before pressing the numbers. One moment please for the first question.
Thank you.
Speaker Change: Operator, we're now ready for questions.
Mary Sue: Thank you.
Mary Sue: The key question press the Star then the number one.
Laurie: Laurie a question press star two.
Mary Sue: Speakerphone, please pick up your handset before pressing the numbers.
Speaker Change: One moment please for the first question.
Joshua Buchalter: First question comes from the line of Joshua Buchalter with TD Calendar.
Speaker Change: First question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your question.
Akash Palkhiwala: Hey guys, thanks for taking my question. I guess to start, I wanted to clarify the QTL guidance. So you're talking to sort of flat or levels in fiscal 2025 versus 2024. I know you signed the two agreements recently. Could you maybe speak to how we should think about your assumptions on overall unit shipments and the royalty per unit tracking through the year? Thank you.
Joshua Buchalter: Hey, guys. Thanks for taking my question I guess to start I wanted to clarify the QTL guidance that you're talking to sort.
Joshua Buchalter: Sort of flat levels in fiscal 2025 versus 2024.
Joshua Buchalter: I know you signed the two agreements recently could you maybe speak to how we should think about your assumptions on overall unit shipments and the royalty per unit tracking through the year. Thank you.
Akash Palkhiwala: Joshua, it's Akash. I think our overall assumption on the market is that it is either flat or gross, low single digits on a year over year basis. Now, of course, this doesn't take into account upside opportunities in terms of the China subsidy and the AI replacement rate.
Joshua Buchalter: Yes, Joshua I'd say gosh.
Joshua Buchalter: I think our overall assumption on the market is that it is either flat or grows.
Joshua Buchalter: Low single digits on a year over year basis now of course this doesn't take into account upside opportunities are in terms of the China subsidy and the AI a replacement rate, but the baseline assumption is what goes into the city for QTL forecasts that we just gave.
Samik Chatterjee: But the baseline assumption is what goes into the QTL forecast that we just Our next question comes from the line of Samik Chatterjee with J.P.
Speaker Change: Our next question comes from the line of Cemig chatter G with J P. Morgan. Please proceed with your question.
Samik Chatterjee: Morgan.
Samik Chatterjee: Please proceed with your question. Hi, thank you for taking my questions.
Speaker Change: Hey, great.
Samik Chatterjee: And I have a couple of questions, but maybe if I can start off on the PC platform, and particularly Snapdragon X, maybe Cristiano, if you can sort of talk about how you're sort of thinking about 2025 and 2026 playing out in terms of device launches on your Snapdragon platform for PCs, and particularly more interested in hearing how you're now thinking about the adoption curve between enterprises and consumers. What are you hearing from the OEM partners in terms of how to think about the adoption curve rate of enterprise and consumer as we go? for the next couple of years and have a quick follow-up after that.
Speaker Change: Thank you for taking my questions and I have a couple of questions, but maybe if I can start off on the PC platform and particular Snapdragon ex maybe Christian if you can sort of talk about how you're sort of thinking about <unk> 25 in 2026, playing out in terms of did.
Speaker Change: Device launches on your Snapdragon platform for Pcs, and particularly more interested in hearing how you're now thinking about the adoption curve between enterprises and consumers.
Speaker Change: What are you hearing from the OEM partners in terms of how to think about the adoption rate of the enterprise and consumer as we go.
Speaker Change: For the next couple of years and have a quick follow up thank you.
Cristiano Amon: Thank you. Very good. Thank you for your question. Look, we're very happy with the trajectory that we are on PCs. Maybe I'll start answering the question by providing some bookends, right? We said at the Investor Day last year that we expect to get $4 billion in Windows PC revenue by 2029. We actually said at that time $4 billion out of a $35 billion, if I'm not mistaken, Sam, which if you calculate, you assume a share about 12% of the market we're addressing. I think we started very well with a number of designs. One metric that we have is the design traction continue.
Speaker Change: Very good to make thank you for your question look.
Speaker Change: We're very happy with the trajectory that we are in pieces, maybe I'll start answering the question by by providing you. Some bookends right. We we said at the Investor Day last year that we expect to get $4 billion in it.
Speaker Change: In Windows PC revenue by 2029, we actually said at that time 4 billion out of a 35 billion if I'm not mistaken sandwich. If you calculate you assume a share about 12% of the market. We're addressing are I think we started very well with a number of designs one metric that we have.
Speaker Change: Is the design traction continue we have now over 80 design wins launched or in development across the X series and we targeting commercialization of more than 100 devices. As we go into 2025 to 2026. So design traction is good is continue to increases which is a good sign the second data point.
Cristiano Amon: We have now over 80 design wins launched or in development across the X-series, and we're targeting commercialization of more than 100 devices as we go to 2025 to 2026. So design traction is good. It continues to increase, which is a good sign. on the script is we look at the United States retail. We started to expand retail in different markets. We look at United States, which one of the priority markets that we had, and the data show that the sale, within the sale of US retail of Windows laptops above $800, we had more than 10% share, which is actually consistent with the projection we made of how we're gonna grow in the five years.
Speaker Change: Provided.
Speaker Change: On on the script is we look at United States retail, we started to expand retail when different markets. We're looking at United States, which one of them one of the priority markets that we had and the data show that the sale within the sale of U S retail of Windows laptops above $800 we had.
Speaker Change: More than 10% share, which is actually consistent with the projection, we made or how we're gonna grow under five years and we liked that metric. This early in the process.
Cristiano Amon: And we like the metric that's early in the process. We're still starting. As I said, we'll continue to expand new markets. We like the results today. And the design traction is continue to increase. The first wave was consumer. Now it's being deployed towards commercial. That's why we have emphasis is showing a lot of the commercial applications now native on Snapdragon. from VPN, from security, et cetera. And we're excited, especially because of that, we launched a new product to expand the addressability to now $600 price laptops, which we're not compromising AI. And as I mentioned in the call, actually a few days after Microsoft announced DeepSeek R1 running on Snapdragon X series laptops first.
Speaker Change: We're still we're still starting.
Speaker Change: As I said, we will continue to expand to markets. We like the results today and the design traction has continued to increase the first wave was consumer now its being deployed.
Speaker Change: <unk> towards a commercial that's why we have emphasized is showing a lot of the commercial applications now native phone snapdragon.
Speaker Change: From from VPN from security et cetera, and we excited especially because of that we launched a new product to expanded addressable to now 600 dollar price of laptops, which we're not compromising AI and as I mentioned in the call are actually a few days after Microsoft announced deep CCAR one.
Speaker Change: Running on a self dragon ex elite our X series laptops forest. So actually we're starting we're happy with the traction consistent with our long term projections, we're just going to keep executing.
Samik Chatterjee: So actually we're starting, we're happy with the traction, consistent with our long-term projections, we're just gonna keep. Got it, got it. No, thank you for that.
Got it got it no. Thank you for that and maybe for my follow up I can sort of take the cue from what our cost mentioned for the last question, which is China, China market for smartphones and the subsidies that you're seeing sort of what are you seeing on the ground in terms of response for the from the consumer to the subsidies.
Akash Palkhiwala: And maybe for my follow up, I can sort of take the cue from what Akash mentioned for the last question, which is China, China market for smartphones and the subsidies that you're seeing sort of, what are you seeing on the ground in terms of response for the from the consumer to the subsidies? And what are you sort of thinking in terms of the impact to overall the Chinese smartphone OEM and their sort of growth, sustainability, and I don't know if Akash, you give the number in terms of what growth you saw with the Chinese OEMs, Chinese Android OEMs this quarter, but how are you thinking about sort of the growth trajectory going forward with them, particularly in light of these subsidies?
Speaker Change: What are you sort of thinking in terms of the impact to overall, the Chinese smartphone OEM and their sort of growth sustainability I don't know if you gave the number in terms of what growth you saw with the Chinese Oems Chinese Android Oems this quarter, but how are you thinking about sort of the growth trajectory going forward with them, particularly in light of the subsidies. Thank you.
Akash Palkhiwala: Sure, so let me address it in parts. So as it relates to the subsidy, as you know, they just began in January. So we are not that far into the cycle. And so we'll have a better view of it next quarter. In terms of historical reference point, in the past, we've seen that when subsidies have come in, it has improved the size of the market. So there is that opportunity that comes with it, but it's not something that is contemplated yet in our second quarter guidance. Now, let me go back to first quarter, because that's where I made the volume comment as well.
Speaker Change: Sure. So let me let me address it in parts so as it relates to the subsidy as you know they just began in January so we are not that far into the cycle and so we'll have a better view of it next quarter.
Speaker Change: In terms of historical reference point in the past we've seen that when subsidies have come in it has improved the size of the market. So there is that opportunity that comes with it but it's not something that is contemplated yet in our second quarter guidance.
Speaker Change: Now, let me go back to fourth quarter, because that's where I made the volume comment as well if you look at the fourth quarter upside that we had in handsets very strong performance record performance and there were two drivers first is the content increase year over year that we have discussed in detail as more capability gets added to the chipset that shows up.
Akash Palkhiwala: If you look at the first quarter upside that we had in the handsets, very strong performance, record performance, and there were two drivers. First is the content increase year over year that we have discussed in detail as more capability gets added to the chipset, it shows up in our price points. The second was the volume increase that we saw on a year over year basis as well. And when you really look at the volume increase and break it down into drivers, we had higher share, of course, at Samsung, they're using us globally in the GS25.
Speaker Change: In our price points are the second was the volume increase that we saw on a year over year basis, as well and when you really look at the volume increase and break it down into drivers we had higher share of course at Samsung, they're using us globally in the G. S. 25, so that helps purchases that went into the December quarter.
Akash Palkhiwala: So that helps purchases that went into the December quarter before the phone launch. The second is we saw higher end consumer demand in China for premium devices. And if you think about how that happens, it's a long term trend that we've seen in China, that the premium tier continues to grow. And it's a benefit that showed up in the quarter as well. The second is our customers are gaining share in the China market. And so that is a benefit that translates through as well. So we feel very good about all those drivers. They're all kind of sustained long term drivers in our business that positions as well as we look at the second half of the fiscal year.
Speaker Change: Before the phone launch the second as we saw higher end consumer demand in China for premium devices, and if you think about.
Speaker Change: How that happens it's it's a it's a long term trend that we've seen in China that the premium tier continues to grow and it's a benefit that showed up in the quarter as well. The second is our customers are gaining share in the China market and so that is a benefit that translates through as well. So very we feel very good about all those drivers they are all.
Speaker Change: Kind of sustained long term drivers in our business that positions us well as we look.
Speaker Change: Look at the second half of the fiscal year.
Stacy Rasgon: Our next questions come from the line of Stacy Rasgon with Bernstein Research. Thank you. I appreciate your time. I appreciate your questions.
Speaker Change: Our next questions come from the line of Stacy restaurant with Bernstein Research. Please proceed with your question.
Stacy Rasgon: Hi, guys, thanks for taking my questions. Um, for the first one, I wanted to ask about the QTL guide a flat year over year. So in the queue, it suggests that you're still negotiating with Huawei. And I'm assuming the QTL guide for Q2, which is a little lighter than the normal has no Huawei in it because of that. Does the annual guide for flat year over year assume that you do not settle Huawei?
Stacy: Hi, guys. Thanks for taking my questions. So the first one I wanted to ask about the QTL guide of flat year over year. So in the Q it suggest that you're still there.
Stacy: Sitting with Huawei, and then I'm, assuming the QTL guide for Q2, which is a little lighter than the normal has no huawei in it because of that because the annual guide for flat year over year assume that you do not settle Huawei and if you do renegotiating and get some money, but would there be upside to that number based on your current assumptions.
Alex Rogers: And if you do renegotiate and get some money for that, would there be upside to that number based on your current Yeah, this is Alex.
Stacy: Yeah. This is Alex so thanks for the question Stacy.
Alex Rogers: So thanks for the question, Stacy. So basically, what we've managed to accomplish over the last year or so is essentially signing up everybody to extensions. So we've had a really good run of execution with bringing in Transient for 4G, which is a significant development because they've popped up the ranks of OEMs in terms of unit volume, very high up the ranks, actually. So the 4G complements the 5G license that we have them signed up to, and they're transitioning to more 5G content in their overall product offering. And then we have these last two significant Chinese OEMs that we've signed up for that we finished negotiations with and the execution is just pending return from the Lunar New Year holiday.
Stacy: So basically what we've managed to accomplish over the last year or so is essentially signing up everybody. Two extension. So we've had a really good run of execution with bringing on transient for <unk>, which is a significant development because they popped up the ranks of Oems in terms of unit volume very high up the ranks actually.
Stacy: So the <unk> complements the <unk> license that we have them signed up to and they're transitioning to more <unk> content.
Stacy: And their overall product offering and then we have these last two significant Chinese Oems that we've signed up or that we finished negotiations with and the execution is just pending returned from the from the lunar new year holiday.
Alex Rogers: The Huawei discussions are still in play, so the numbers don't actually include the potential from a renewal with Huawei, and basically everything else is taken care of. Got it. So that slack guidance doesn't include any Hawaii settlement, just to be clear. Correct. Neither the second quarter guidance or the full year.
Stacy: The Huawei discussions are still in play so the numbers don't actually include the the potential from a from a renewal with Huawei.
Stacy: And basically everything else is is taken care of.
Stacy: Got it so that's our guidance doesn't include any quality settlement.
Stacy: Sure.
Stacy: Correct it neither of the second quarter guidance or the full year comment.
Stacy Rasgon: And for my follow-up, I just wanted to know, we've seen a fair amount of just in general personal electronic strength recently, and there's some thoughts that maybe some of it might be related to sort of pre-tariff pull-forwards.
Speaker Change: Okay, that's great and for my follow up I just wanted to know you. We've seen a fair amount of just in general personal electronics strength recently and there's some thought that maybe some of it might be related to sort of pre tariff pull forward I don't know if you guys would be able to do you have any view on that but do you have any comments on what you might see and whether or not the threat of tariffs.
Cristiano Amon: I don't know if you guys would be able to have any view on that, but do you have any comments on what you might see and whether or not the threat of tariffs might be driving some pre-builds or increased demand in the near future? Absolutely not. You know, I think it's funny, Stacy, we expected everybody to be asking this question. We actually are seeing, it's pretty simple, right? So number one is higher than expected, I think, share a Samsung with the launch of GS25 globally. The second thing is end customer demand in China. And we have data on the sell through is basically Snapdragon 8 Elite has been quite successful.
Speaker Change: Might be driving some rebuilds or or or increased demand in the near term.
Speaker Change: Absolutely not and I think it's it's it's funny Stacy we expect everybody to be asking this question.
Speaker Change: We actually are seeing it it's pretty simple right. So number one is a higher than expected I think our share of Samsung with the launch of a G. S. Twenty-five globally. The second thing is end customer demand in China, and we have data on the sell through.
Speaker Change: Is basically snapdragon eight elites has been quite successful demand on smartphones onshore actually exceeded our expectations is built on what I said the trend of premium tier continued to expand.
Cristiano Amon: Demand on smartphones launch will actually exceed our expectations. It's built on what Akash said, the trend of premium tier continue to expand. Smartphones number one consumer electronic device purchase. I think there is a positive launch of AI features. Customers build great devices, they are gaining share in the premium tier and that is record driving demand. And as Akash outlined, all of our smartphone products from our customers in China using 8 Elite, the price points that they launch those devices in the market, they're all eligible for the subsidy. So that's not contemplated in the Q2 guide, which it could be an interesting development.
Speaker Change: Smartphone is number one consumer electronic device purchase I think there is a positive a launch of AI features customers feel great devices. They are gaining share in in the premium tier and ER that is equity driving demand and as the cash outlined.
Speaker Change: All of our smart phone all of our smartphone products.
Speaker Change: From our customers in China, using eight elites are the price points that they lounge those devices in the market. They are all eligible for the subsidy. So that's not contemplated in the Q2 guide.
Speaker Change: And which it could it could be an interesting development. We saw they usually further expand the premium tier but this is no inventory. This is no build out ahead of tariffs does this end customer demand.
Cristiano Amon: We saw they usually further expand the premium tier, but this is no inventory. This is no build out ahead of tariffs. This is end customer demand.
Chris Caso: For the next questions, from the line of Chris Caso with Wolf Research, please use your... Yeah, thanks.
Speaker Change: The next questions are from the line of Chris Caso with Wolfe Research. Please proceed with your question.
Chris Caso: Good evening. I guess following on with those comments, Cristiano, you know, how should we think about June quarter now? Because typically, you know, June quarter, there are no flagship launches and that that has some effect on on QCT, you know, given the share gain at Samsung, does that affect the seasonality for June at all? And how should we be thinking that Yeah, I think Chris, you're right in terms of understanding our seasonality. When you look at the last several years, this kind of the framework across quarters, it is driven by the timing of the flagship launches.
Chris Caso: Yeah. Thanks, Good evening I guess following on with those comments first I know you know how.
Chris Caso: How should we think about the June quarter now because typically a June quarter. There are no flagship launches in that that has some effect on.
Chris Caso: On <unk> given the share gain at Samsung does that affect the seasonality for June at all and how should we be thinking that in general.
Chris Caso: Yeah, I think Chris you're right in terms of understanding our seasonality when you look at the last several years.
Chris Caso: Just kind of the framework across quarters. It is driven by the timing of the flagship launches and so as a result, we expect first quarter to be the highest high point from an EPS perspective in third quarter is the low point because you don't have as many flagship launches in it.
Cristiano Amon: And so as a result, we expect kind of first quarter to be the high point from an EPS perspective and third quarter is the low point because you don't have as many flagship launches in it. On your question on specifically on Samsung, Samsung is in kind of the impact of the higher share is included in the first quarter and the second quarter guide as well. And so it will be included in third and fourth quarter as well. So I don't think it fundamentally changes the seasonality across. Got it.
Chris Caso: On your question on specifically on Samsung Samsung is in a kind of the impact of the higher share is included in the fourth quarter in the second quarter guide as well and so it will be included in third and fourth quarter as well. So I don't think it fundamentally changes the seasonality across the quarters.
Chris Caso: Got it.
Chris Caso: As a follow-up, if you could address some of the higher price points that you're seeing on Snapdragons now, and certainly there are more features in there because of AI, but to some extent it's also about cost too, because the waiver costs are higher. What's the impact of that on Qualcomm, not just from a quarter basis, but looking a little bit out, should we expect ASP to be a tailwind for you, and then how are your OEM customers dealing with that? Is it a factor of, you know, we're just going to see a mix hire to hire in phones, or, you know, will, you know, is that going to result in higher ASP?
Chris Caso: As a follow up if you could address some of the higher price points that youre seeing on Snapdragons now and.
Chris Caso: Certainly there are more features in there because of AI, but to some extent, it's also about cost too because the wafer costs are higher.
Chris Caso: Whats the impact of that on Qualcomm, you know not just from a quarter basis, but looking a little bit out.
Speaker Change: Should we expect asps to be a tailwind for you and then how are your OEM customers dealing with that.
Speaker Change: Is it a factor of we're just going to see a mix higher two to higher end phones or is.
Speaker Change: Is that going to result in high Res Bay.
Cristiano Amon: Chris, the primary driver here is that there is a consumer demand for more capable smartphones. And so as we go from generation to generation, we're adding a lot more capability on the processing side, on AI side, and connectivity, and that is showing up in the price points in our chip. So that's the primary driver. Of course, as you're aware, TSMC price increases for 3 and 4 nanometer did kick in in January. And so as we've said in the past, our objective there is to reflect the cost increases in ASPs over a period of time. So those are the really key drivers.
Chris The primary driver here is that there's a consumer demand for more and more capable smartphones and so as we go from generation to generation, we're adding a lot more capability on the processing side on on AI side and connectivity and that is showing up in the price points in our chip. So that's the primary.
Speaker Change: The driver.
Chris Caso: Of course, as you're aware TSMC price increases four three and four nanometer does did kick in in January and so as we've said in the past our objective there is to reflect the cost increases in asps over a period of time. So those are the really the key drivers when you step back I think the one of the messages that cusano gave earlier as an important one.
Cristiano Amon: When you step back, I think one of the messages that Cristiano gave earlier is an important one is that the overall market, it's not just about each tier kind of having a more capable chip, but a makeshift across tiers and a larger market for premium devices.
Chris Caso: One is that the overall market. It's it's not just about each dear are kind of having a more capable chip, but a mix shift across tiers and a larger market for premium devices.
Operator: Thank you.
Ross Seymour: The next question is from the line of Ross Seymour with Deutsche Bank.
Speaker Change: Thank you. The next question is from the line of Ross Seymore with Deutsche Bank. Please proceed with your questions.
Ross Seymour: Please receive your question. Thanks for letting me ask a question. I just want to ask a more cyclical question, probably most applicable to your IOT segment. That business has been very strong year over year, but you've had a couple quarters with negative sequential comps. Is that just normal seasonality, or is there cyclicality involved that some of your broad-based peers are seeing? Just kind of want to judge where we are in that cyclical trend.
Speaker Change: Hey, guys. Thanks for letting me ask a question I just wanted to ask a more cyclical question, probably most applicable to your Iot segment.
Speaker Change: That business has been very strong year over year, but you've had a couple of quarters with negative sequential comps is that just normal seasonality or is there cyclicality involved with some of your broad based peers are saying just kind of want to judge where we are in that cyclical trends.
Ross Seymour: Yeah, Ross, there's definitely one of the big drivers on the quarterly profile is is because of consumer IoT. And that does have cyclicality involved, because you're building for the holiday season. And, and then when we get into the March quarter, of course, you're past that point.
Speaker Change: Yeah, Ross, there's definitely a one of the big drivers on the quarterly profile is is because of consumer Iot and that does have cyclicality involved because you are building for the holiday season, and and then when we got into the March quarter of course, you're past that point.
Akash Palkhiwala: When you look at the other two parts of our IoT business, which is industrial and edge networking, we're consistently seeing strength across the quarter. Great to hear that.
Speaker Change: When you look at the other two parts of our Iot business, which is industrial and edge networking, we're consistently seeing strength across the quarters.
Speaker Change: Yeah.
Akash Palkhiwala: I guess as a follow up question, then switching gears to the gross margin, Akash, congratulations again, it looks like you kept that in QCT pretty much flat sequentially, despite your thought that it was going to go down in the December quarter. Is that something that is just structurally going to be a little higher than that, I guess, kind of implied 48 to 49% range? And if so, what's changed? Yeah, the gross margin, both in our December quarter and our March quarter benefits from the fact that we have stronger premium tier volume that improves the mix, overall mix of our portfolio and that shows up in gross margin.
Speaker Change: Great to hear and I guess as a follow up question and then switching gears to the gross margin mccosh.
Speaker Change: Congratulations again it looks like you kept that in <unk> is pretty much flat sequentially. Despite your thought that it was going to go down in the December quarter is that something that is just structurally going to be a little higher than that I guess kind of implied 48% to 49% range.
Speaker Change: And if so what's changed.
Speaker Change: Yes, the gross margin both in our December quarter, and our March quarter of benefit from the fact that we have stronger premium to your volume.
Speaker Change: That improves the mix overall mix of our portfolio and that shows up in gross margins. So that's that's been the primary driver of the strength and so as you see the mix changes it will flow through the margin numbers, but yeah. We're very happy just like you that the margins being very strong.
Akash Palkhiwala: So that's been the primary driver of the strength. And so as you see the mix changes, it will flow through the margin numbers. But yeah, we are very happy just like you that the margins have been very strong.
Timothy Arcuri: Our next question is from the line of Timothy Arcuri with UPS. Please receive your question.
Speaker Change: Our next question's from the line of Timothy Arcuri with UBS. Please proceed with your questions.
Timothy Arcuri: Thanks a lot.
Timothy Arcuri: Thanks, a lot I had two cristiana was there any evolution in the way youre thinking about the modem situation that your large customer I know.
Timothy Arcuri: I had to Cristiano, is there any evolution in the way you're thinking about the modem situation at your large customer? I know, you know, there's been some back and forth on that recently. Is there any change there? Are you feeling like maybe you'll be there a bit, you know, a little bit longer than you had expected? That's the first question. Yeah, the answer is no. I think we're, we're really operating with the assumptions. I think we've been very clear, I think what those things are, we expect 20% share for the launch that happens in 2026.
Timothy Arcuri: You know there's been some back and forth on that recently is there any change there or are you feeling like maybe you'll be there a.
Timothy Arcuri: A little bit longer than you had expected that's the first question.
Timothy Arcuri: Yeah. The answer is no I think where we're really operating with.
Timothy Arcuri: The assumptions I think we've been very clear I think what are those things are we expect 20% share for the launch that happened in 2026.
Cristiano Amon: And the current agreement ends after that we assuming no renewal, so which means nothing in 2027. For 2025 launches, we expect share to be between 100% and 20%. So, so we don't know. But I think we've been very clear about how we're modeling that business. And I think that's the assumption going. Thanks a lot.
Timothy Arcuri: And the current agreement ends after that we assuming no renewals, so which means nothing in 2027 for 2025 loan teams, we expect share to be between 100% and 20%. So so we don't know, but I think we've been very clear.
Timothy Arcuri: About how we're modeling that business and I think that's the assumption going forward.
Speaker Change: Thanks, a lot of cost can you give us an idea of how big the PC business was within Iot.
Timothy Arcuri: Akash, can you give us an idea of how big the PC business was within IoT? You said you were 10% I think of the $800 or sorry, the above $800 laptop market in the US. I'm guessing you did about $100 million, a little bit more than $100 million in December. Is that is that close?
Speaker Change: You said you were 10% I think of the $800 or sorry, the above $800 a laptop market in the U S.
Speaker Change: I'm guessing you did about $100 million, a little bit more than $100 million in December is that is that close.
Akash Palkhiwala: Yeah, Tim, it's Akash. So from an overall revenue perspective, I think the way we've set it up is we've set targets long term for 29 for each of these areas. And we plan to give an annual update on each of those targets. So we're not breaking it down every quarter by area. To me, what's the most important thing on the PC is the market that we were playing in, which is devices over $800. And, and our focus on retail to begin with, we're very happy that we were able to get 10% share. I think just as Cristiano said earlier, if we equate that to our long term target, which is 12% of the overall market, that's a great start towards the number we'd set up.
Speaker Change: Yeah, Tim it's a it's a gosh so from an overall revenue perspective, but I think the way we have set it up as we've given we've set targets long term for 2009 for each of these areas and we plan to give an annual update on each of those targets. So we're not breaking it down every quarter by area.
Speaker Change: Do me, what's the most important thing on the P. C. As the market that we're playing in which is devices over $800.
Speaker Change: And.
Speaker Change: Our focus on retail to begin with.
Speaker Change: We're very happy that we were able to get 10% sure I think just ask Cristiano said earlier, if you equate that to our long term target, which is 12% of the overall market. That's a great start towards the number we had set up.
Tal Liani: Thank Our last question is from the line of Tal Liani with Bank of America. Please proceed with your questions. I want to focus on a 20% growth of smartphones and QCT this quarter. The question is, how long will it take? The market itself is not growing, there was last quarter there was growth in China. was very strong. This quarter, we have the initial of Samsung. So can you talk about longevity of the current trends? How long can it continue? Could you grow even if the market doesn't grow?
Speaker Change: Thank you.
Speaker Change: My last question is from the line of Tal Leone with Bank of America. Please proceed with your questions.
Speaker Change: Hey, guys.
Tal Leone: I wanted to focus on a 20% growth of smartphones and <unk> this quarter in.
Tal Leone: Question is how long will discontinue the.
Tal Leone: The market itself is not growing that was last quarter there was growth in China.
Tal Leone: Very strong this quarter, we had the initial Samsung. So can you talk about the longevity of the current trends how long can you continue could you grow even if the market doesn't grow and then just an update on China demand. Thanks.
Tal Liani: And then just an update on China.
Tal Liani: Sure Tal.
Cristiano Amon: So let me break it down. If you look at our year over year performance in the in in QCT handsets, we were up 13%. And as I said earlier, the drivers of those is really a combination of higher volume and higher ASPs. The ASPs as content increase, which we've talked about, we've seen consistently that continue to increase over the last several years. And as we look forward, we think that's very sustainable, just we're adding a lot more capability to the device and the consumers are looking for that opportunity. In terms of volume, one of the key metrics for us is the fact that the premium tier continues to grow.
Tal Leone: Sure. So let me break it down if you look at our year over year performance in the in our in <unk> handsets, we were up 13%.
Tal Leone: And as I said earlier the drivers of those is is really a combination of higher volume and higher asps.
Tal Leone: <unk> content increase which we've talked about we've seen consistently that continue to increase over the last several years and as we look forward. We think that's very sustainable just we're adding a lot more capability to the device and the consumers are.
Tal Leone: Looking for that opportunity in terms of volume.
Tal Leone: One of the key metrics for US is the fact that the premium tier continues to grow. So if you look at the last three or four years.
Cristiano Amon: So if you look at the last three or four years, devices greater than $400 have gone from being 21% of the market to now over 30% of the market. And so that is a trend that's incredibly positive for us because that's the market that we are very strong in. And so we have a combination of the units within that part of the market is growing very quickly. And within that, our content is growing as well. And those are the two factors that that drive the handset growth of 13% on a year over year basis. When you look at the March quarter, we're guiding handset growth of 10% on a year-over-year basis, which is, again, a very strong number.
Tal Leone: Devices greater there for $100 have gone from being 21% of the market to now over 30% of the market.
Tal Leone: And so that is a trend that's incredibly positive for us because that's the market that we are very strong in <unk>.
Tal Leone: And so we have a combination of the units within that part of the market is growing very quickly and within that our content is growing as well and those are the two factors that are.
Tal Leone: That drive the handset growth of 13% on a year over year basis. When you look at the March quarter, we're guiding handset growth of 10% on a year over year basis, which is again, a very strong number so pretty pretty happy with how we are set up in that business and both in the in the first half of the year and it positions.
Cristiano Amon: So pretty happy with how we are set up in that business, both in the first half of the year and in positions as well as we look forward.
Tal Leone: Well as we look forward.
Speaker Change: Nine update.
Cristiano Amon: Can you repeat your question on that, Tal, please? I said just China. China was strong the last few quarters.
Speaker Change: Can you can you repeat your question on that tell please I said, just China, China was strong the last few quarters can you give it.
Cristiano Amon: Can you give a... maybe I missed it, but what's the current trend? Yeah, I think China definitely strong in the premium tier. We've seen that part of the market grow. We've also seen our customers gain share within that market. And then last thing is, we're going to have subsidies come in. And so that is a potential that that benefits that part of the market as well. So pretty, I think positive tailwinds for us.
Speaker Change: Maybe I missed it but what's the current trends in China.
Speaker Change: Yeah, I think China definitely stronger in the premium tier a we've seen that part of the market grow. We've also seen our customers gained share within that market.
Speaker Change: And then last thing is we're going to have subsidies come in and so that is a potential that that benefits that part of the market as well so pretty I think positive tailwind for us there.
Speaker Change: Thank you.
Cristiano Amon: That concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call? Just so like to...
Speaker Change: That concludes today's question and answer session. Mr. Omar do you have anything further to add before adjourning the call.
Speaker Change: Uh huh.
Speaker Change: Just so like too.