Q2 2025 Qualcomm Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you were standing by welcomed.

Operator: Welcome to the Qualcomm second quarter fiscal year 2025 earnings conference call. At this time, all participants are in a 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 destroy a question, press star, then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Please send me your questions to one question and one follow-up.

Welcome to the Qualcomm second quarter fiscal year 2025 earnings conference call.

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

Later, well conduct a question and answer session.

If you'd like to ask a question during this time.

The Star then the number one on your telephone keypad.

Your question Press the Star then the number two.

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

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

Operator: As a reminder, this conference is being recorded April 30th, 2025. Playback number for today's call is 877-660-6853. For international callers, please dial 201-612-7415. Playback reservation number is 137-527-8282.

As a reminder, this conference is being recorded April 30th 2025.

Playback number for today's call is 870 76606853.

International callers, please dial 201612 <unk>.

7415.

Playback reservation number is 1375 to 782.

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

Mauricio Lopez: I would now like to turn the call over to Mauricio Lopez, <unk>, Vice President of Investor Relations.

Angela Vezzadain: Angela Vezzadain, please go ahead. Thank you and good afternoon, everyone.

Speaker Change: Please go ahead.

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.

Angela Vezzadain: Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala.

Angela Vezzadain: 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 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 accompany this call on our Investor Relations website. In addition, this call is being webcast on Qualcomm Dot com and a replay will be available on our website later today.

Angela Vezzadain: 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.

Speaker Change: During the call today, we will use non-GAAP financial measures as defined in regulation G. And you can find the related reconciliations to GAAP on our website. We will also make forward looking statements, including projections and estimates of future events business or industry trends or business or financial results.

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

Angela Vezzadain: 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.

Cristiano Amon: And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Amon. Thank you, Mauricio. And good afternoon, everyone. Thanks for joining us today. In Fiscal Q2, we delivered non-GAAP revenues of $10.8 billion and non-GAAP earnings per share of $2.85. Revenues of $9.5 billion from our chipset business were driven by strength across handsets, automotive, and IoT, all exceeding revenue expectations. Automotive and IoT revenues increased 59% and 27% year-over-year, respectively. Licensing business revenues were $1.3 billion. Demand for industry leading platforms continues to expand as high performance connectivity and processing at the edge are increasingly important and AI becomes more pervasive across industries.

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

Speaker Change: Thank you Mauricio and good afternoon, everyone. Thanks for joining us today in fiscal Q2, we delivered non-GAAP revenues of $10 8 billion and non-GAAP earnings per share of $2.85.

Speaker Change: Revenues of $9 $5 billion from our chipset business were driven by strength across handsets automotives in Iot, all exceeding revenue expectations, automotive and Iot revenues increased 59% and 27% year over year, respectively.

Speaker Change: Licensing business revenues were $1 $3 billion.

Speaker Change: Demand for our industry, leading platforms continues to expand its high performance connectivity and processing at the edge are increasingly important in the eye becomes more pervasive across industries.

Cristiano Amon: We have the industry's broadest product and IP portfolio, a strong track record of establishing a technology leadership position in every industry we enter, and a clear vision for the future. As we navigate the current macroeconomic and trade environment, we remain focused on driving the next wave of AI smartphones. and growing our non-handset revenues to $22 billion by Fiscal 29. We are excited by the ongoing developments in generative AI, including the proliferation of smaller models. In just six months, the AI landscape has been redrawn with a wide array of new consumer and enterprise applications. New players have emerged in AI video models are becoming more dependable, marking a significant expansion in capabilities.

Speaker Change: We have the industry's broadest product and IP portfolio, a strong track record of establishing a technology leadership position in every industry. We entered in a clear vision for the future.

Speaker Change: As we navigate the current macroeconomic and trade environment, we remain focused on driving the next wave of AI smartphones.

Speaker Change: Growing our non handset revenues to $22 billion by fiscal 'twenty nine.

Speaker Change: We are excited by the ongoing developments in generative AI, including the proliferation of smaller models in just six months. The AI landscape has been redrawn with a wide array of new consumer and enterprise applications.

Speaker Change: New players have emerged in AI video models are becoming more dependable, marking a significant expansion and capabilities. Additionally, smaller gen. AI models. They can run directly on device are also advancing rapidly you know it takes only a few months to match the performance of their larger.

Cristiano Amon: Additionally, smaller Gen AI models that can run directly on device are also advancing rapidly. It now takes only a few months to match the performance of their larger cloud-based counterparts compared to 12 months just a year ago. Several new state-of-the-art small-language and multimodal models were recently released, including Microsoft PHY, Google Nano, Metalama, Mistral Ministral, OpenAI Whisper, and Alibaba Quen. Some of these models are already running on Snapdragon Plus. As this trends continue, the opportunity for Qualcomm is significant.

Speaker Change: Cloud based counterparts compare to 12 months, just a year ago.

Speaker Change: Several new state of the art small language and multimodal models were recently released including Microsoft Fi, who go nano metal AMA Mischelle minions store opening I Whisper and Alibaba when some of these models are already running on snapdragon platforms.

Speaker Change: As this trends continue the opportunity for Qualcomm is significant.

Cristiano Amon: I will now provide some key highlights from across the business, starting with mobile. At Mobile Ward Congress, we announce our X854G platform, the ward's most advanced AI-powered modem-to-antenna system, delivering substantial improvements in speed, efficiency, coverage, and power consumption. The X85 sets new benchmarks and brings connectivity leadership to the Android ecosystem. It also supports 5G advanced capabilities with ultra-fast peak download speeds of up to 12.5 gigabits per second and delivers the connectivity required for hybrid and agentic AI experiences. High-performance, low-latence 5G is essential for AI applications, ensuring seamless and timely data transmission and information retrieval for real-time processing and decision-making.

Speaker Change: We will now provide some key highlights from across the business starting with mobile.

Speaker Change: And mobile World Congress, we announced our X 85 G platform. The awards most advanced AI powered more than two one tender system delivering substantial improvements in speed efficiency coverage in power consumption.

Speaker Change: The X 85 sets, new benchmarks and brings connectivity leadership to be enjoyed ecosystem. It also supports five G advanced capabilities with ultrafast peak download speeds of up to 12.5 Gigabits per second and delivers the connectivity required for hybrid and Eh Jen.

Speaker Change: Take AI experiences.

Speaker Change: High performance low latency five G is essential for AI applications, ensuring seamless and timely data transmission in information retrieval for real time processing and decision making according.

Cristiano Amon: According to Google, the X85 is, quote, designed for mobile AI and is the perfect match for Android in the agentic experiences of the Gemini era. This modem delivers breakthrough 5G speeds, network reliability, and intelligent connectivity to Android phones, cementing Android and Qualcomm technology's leadership in the mobile AI world, end quote. The X85 was also positively received by many of the largest operators in the US, China, and Japan, who are excited about the superior connectivity X85 brings to 5G smartphones, the improved network performance and reliability, and potential for new AI-powered services. The X85 will be shipping in handsets, automotive, and IoT products, starting in the second half of the year.

Speaker Change: According to Google. They X 85 is quote designed for mobile AI is the perfect match for Android in D. Agentic experiences of the Gemini era. This modem delivers breakthrough five D speeds network reliability and intelligent connectivity to <unk>.

Speaker Change: Droid phones.

Speaker Change: Cementing Android and Qualcomm technology its leadership in the mobile AI World and quote. The X 85 was also positively received by many of the largest operators in the U S. China and Japan, who are excited about the superior connectivity X 85 brings to five days.

Speaker Change: Smart phones, the improved network performance and reliability and potential for new AI powered services.

Speaker Change: X 85 will be shipping in handsets automotive and Iot products, starting in the second half of the year.

Cristiano Amon: Within smartphones, we expect this platform to be available exclusively on Android devices.

Speaker Change: Within smartphones, we expect this platform to be available exclusively on Android devices.

Cristiano Amon: In handsets, we continue to gain design traction with our Snapdragon 8 Elite, the industry's most powerful smartphone platform. To date, we have 90 flagship designs shipped or announced globally across major Android OEMs. During the quarter, subsidies in China had a positive impact on growing the premium tier, which has continued to expand over the last several years. Additionally, we're incredibly excited to see our customers launching innovative new flip style devices featuring Snapdragon 8 Elite. This is now a flagship smartphone category. As an example, the recently announced FlipStyle Motorola RAZR Ultra 2025 comes with MotoAI, a suite of AI-powered features such as Catch Me Up, which summarizes notifications and prioritizes urgent messages, Remember This, which saves screenshots, photos and notes to recall later, and Magic Canvas, which lets users create AI-generated images as wallpapers.

Speaker Change: In handsets, we continue to gain design traction with our snapdragon eight elite the industry's most powerful smartphone platform to date, we have 19 flagship designs shipped or announced globally across major Android Oems during the quarter subsidies in China had a pause.

<unk> impact on growing the premium tier, which has continued to expand over the last several years.

Speaker Change: Additionally, we're incredibly excited to see our customers launching innovative new flip style devices featuring snapdragon eight elite. This is now our flagship smartphone category.

Speaker Change: As an example, the recently announced flip style Motorola Razor Ultra 2025 comes with Moto AI.

Speaker Change: Sweet of AI powered features such as catch me up which summarizes notifications and prioritizes urgent messages remember dish, which saves screenshots photos and notes to recall later and magic canvas, which lets users create AI generated images S. Wallpapers.

Cristiano Amon: https://www.flipstyle.com It also integrates Perplexity AI, Google Gemini, Microsoft Copilot, and MetaLum.

Speaker Change: It also integrates perplexity AI, Google Gemini, Microsoft co pilot and metal armor.

Cristiano Amon: We remain excited about the PC opportunity for Snapdragon and we're making progress toward achieving $4 billion in revenues by fiscal 29. We're extremely focused on driving new OEM designs, expanding markets and channels, growing into the enterprise, and increasing the ecosystem of native applications. Since the launch of the first Snapdragon X powered devices in mid-2024, we have more than 85 designs in production or development, and we're targeting more than 100 designs to be commercialized to 2026. In the first calendar quarter of 2025, according to third party sources, Snapdragon based PCs made up approximately 9% of Windows laptops above the $600 price tier in retail US and the top five European countries.

Speaker Change: We remain excited about the PC opportunity for Snapdragon, and we're making progress toward achieving $4 billion in revenues by fiscal 'twenty nine.

Speaker Change: We're extremely focused on driving new OEM designs, expanding markets and channels growing into the enterprise and increasing the ecosystem of native applications since.

Speaker Change: Since the launch of the first Snapdragon ex power devices in mid 2024, we have more than 85 designs in production or development and we're targeting more than 100 designs to be commercialized through 2026.

Speaker Change: In the first calendar quarter of 2025. According to third party sources Snapdragon based P fees made up approximately 9% of windows laptops above the 600 dollar priced year in retail U S and the top five European countries.

Cristiano Amon: We now have more than 750 native applications running on Snapdragon X, including over a hundred for the enterprise. Additionally, there are over 1,400 games running on the planet. Microsoft has continued to add new CoPilot Plus AI capabilities. This includes the rollout in March and April of Expanded Live Captions, which offers real-time audio and video translations in English during virtual meetings, podcast or video playback, and new voice access functions that enable users to interact with the AI assistant using natural language voice commands. Consumers can also experience recall, improved Windows search and click-to-do, making it easier to pick up where you left off, find what you're looking for, and do more with less time.

Speaker Change: We now have more than 750 native applications running on snapdragon acts, including over 140 enterprise.

Speaker Change: Additionally, there are over 1400 games running on the platform.

Speaker Change: Microsoft has continued to add new copilot plus AI capabilities. This includes the rollout in March in April of expanded live captions, which offers real time audio and video translations in English doing virtual meetings podcasts or video playback and new voice access functions that enable user.

Speaker Change: As to interact with the AI assistant using natural language voice commands consumers can also experienced recall improved windows search and click to do making it easier to pick up where you left off find what you're looking for and do more with less time. We also continue to.

Cristiano Amon: We also continue to partner with Microsoft on their signature Surface PC.

Speaker Change: Hartner with Microsoft under signature surface Pcs.

Cristiano Amon: In XR, favorable consumer reception for smart glasses continues, particularly as AI enables more compelling use cases. Meta continues to add more capabilities to their Ray-Ban smart glasses powered by Snapdragon. These include enhanced AI assistant interactions, video AI support, location recall, live speech translation, and more. In addition to META, in Samsung's upcoming Android XR headset, we're pleased to report that we now have more than 15 designs of smart glasses from our global partners. Smart glasses are now the best example of a new device category gaining scale because of AI.

Speaker Change: In XR favorable consumer reception for smart glasses continues, particularly as AI enables more compelling use cases met that continues to add more capabilities to their ray ban smart glasses powered by Snapdragon.

Speaker Change: These include enhanced AI assistant interactions video AI support location recall lives speech translation and more.

Speaker Change: In addition to matter in samsung's upcoming Android XR headset. We're pleased to report that we now have more than 15 designs of smart glasses from our global partners.

Speaker Change: Smart glasses are now the best example of a new device category gaining scale because of AI.

Cristiano Amon: We remain confident in our ability to achieve $2 billion in XR revenues by Fiscal 29.

Speaker Change: We remain confident in our ability to achieve $2 billion and XR revenues by fiscal 'twenty nine.

Cristiano Amon: We continue to see strong demand in automotive for the Snapdragon digital chassis and we're on course to reach our fiscal 29 revenue target of $8 billion. During the quarter, we secured 30 new designs, including 5 ADAS programs, as well as designs from Chinese automakers such as NIO, Zeker, Great Wall, Dongfeng, and more. We also saw 14 commercial vehicle launches from global automakers utilizing our platforms, with a total of 29 commercial vehicle launches since the start of the fiscal year. Additionally, last week at the Shanghai Auto Show, we announced new collaborations with Vesteon and Patel to create next-generation AI intelligent cockpit solutions based on our Snapdragon Cockpit Elite, and with DSAY-SV to jointly deliver a suite of pre-integrated ADAV solutions that support L1 and L2 plus functions.

Speaker Change: We continue to see strong demand in automotive for the Snapdragon digital chassis and we're on course to reach our fiscal 'twenty nine revenue target of $8 billion. During the quarter, we secured 30, new designs, including five eight das programs as well as designs from Chinese automakers such as.

Speaker Change: Neil Zika, Great Wall Dong thing and more we also saw 14 commercial vehicle launches from global automakers utilizing our platforms with a total of 29 commercial vehicle launches since the start of the fiscal year. Additionally.

Speaker Change: Additionally, last week at the Shanghai Auto show, we announced new collaborations with Visteon and Patel to create next generation AI intelligent cockpit solutions based on our Snapdragon cockpit elite and was this a S V to jointly deliver a suite of pre integrated Adas solution.

Speaker Change: <unk> that support L. One and L. Two plus functions.

Cristiano Amon: Fiscal Q2 was a strong quarter for Industrial IoT, with notable new partnerships and recently the completion of two strategic acquisitions, increasing our confidence in executing on our Industrial IoT revenue target of $4 billion by Fiscal 29. In a major step toward advancing industrial intelligence at the edge, we're collaborating with Palantir to integrate their ontology and enterprise systems and AI capabilities on our advanced platform. This collaboration will enhance real-time insights and data-driven decisions in remote and offline environments, enabling OEMs and enterprises to deploy scalable AI solutions for manufacturing, industrial, and automotive applications. We acquired Edge Impulse, one of the industry's leading edge AI development platforms, which enables more than 170,000 developers to build solutions for a wide range of applications, such as asset tracking and monitoring, manufacturing, anomaly detection, and predictive maintenance systems, using various AI capabilities, including computer vision, time series data, audio events, and speech recognition.

Speaker Change: Fiscal Q2 was a strong quarter for industrial Iot with notable new partnerships and recently the completion of two strategic acquisitions, increasing our confidence in executing on our industrial Iot revenue target of $4 billion by fiscal 'twenty nine.

Speaker Change: In a major step toward advancing industrial intelligence at the edge, we're collaborating with Palin tier to integrate their ontology enterprise systems and AI capabilities on our advanced platforms. This collaboration will enhance real time insights and data driven decisions in remote and offline environments.

Speaker Change: Enabling Oems and enterprises to deploy scalable AI solutions for manufacturing industrial and automotive applications, we acquired edge impulse, one of the industry's leading edge AI development platforms, which enables more than 970000 developers to build some.

Speaker Change: Lucian for a wide range of applications, such as asset tracking and monitoring manufacturing anomaly detection and predictive maintenance systems using various AI capabilities, including computer vision time series data I'll do events and speech recognition the development platform.

Cristiano Amon: The development platform includes a comprehensive set of tools and features for data collection and preparation, model training, deployment, and monitoring, all with an easy-to-use, user-friendly interface requiring little or no code at all. As AI accelerates the next phase of digital transformation, Edge and Pulse, combined with our AI hub, creates a true world-class industrial development platform for the age of intelligence. We also acquired Focus AI, a leader in computer vision at the edge with an intelligent end-to-end edge AI and cloud management solution that enables real-time insights and analysis. Focus AI solutions are now part of the new Qualcomm DragonWing Intelligent Video Suite, enhancing our video analytics AI portfolio.

Speaker Change: It includes a comprehensive set of tools and features for data collection and preparation model training deployment and monitoring all with an easy to use user friendly interface, requiring little or no code at all.

Speaker Change: S. AI accelerates the next phase of digital transformation edging pulse combine with our AI hub creates a true world class industrial development platform for the age of intelligence. We also acquired focus AI.

Speaker Change: Leader in computer vision at the edge when intelligent end to end edge AI and cloud management solution that enables real time insights and analysis focus AI solutions are now part of the new Qualcomm Dragon wing intelligent video suite enhancing our video analytics AI portfolio.

Cristiano Amon: Finally, in edge networking, we launched the Dragon Wing Fixed Wireless Access Gen4 Elite platform based on the X85 and is the world's first 5G advanced FWA platform. It includes an AI co-processor that delivers up to 40 tops of AI processing power to optimize wireless connectivity across 5G broadband and Wi-Fi 7 and unlocks new Gen AI capabilities at the network edge.

Speaker Change: Finally in edge networking, we launched the Dragon wing fixed wireless access Gen. Four elite platform based on day X 85 is the world's first five D advance F. Tableau way platform. It includes an AI coprocessor that delivers up to 40 types of AI processing power.

To optimize wireless connectivity across five G broadband and Wi Fi seven and unlocks new Gen AI capabilities at the network edge.

Akash Palkhiwala: I would now like to turn the call over to Akash. Thank you, Krishana, and good afternoon, everyone. I'll start with our second fiscal quarter earnings. We are pleased to announce non-gap revenues of $10.8 billion and non-gap EPS of $2.85 both of which are above the midpoint of our guide. QTL revenues of $1.3 billion and EBT margin of 70% were flat on a year-over-year basis and slightly below the midpoint of our guidance due to lower handset units in emerging regions. QCT delivered revenues of $9.5 billion, an EBT margin of 30%, with revenues at the high end of our guidance.

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

Thank you Krishna and good afternoon, everyone I'll start with our second fiscal quarter earnings.

Speaker Change: We're pleased to announce non-GAAP revenues of $10 $8 billion and non-GAAP EPS of $2 85, both of which are above the midpoint of our guidance.

Speaker Change: QTL revenues of $1 $3 billion and EBT margin of 70% were flat on a year over year basis, and slightly below the midpoint of our guidance due to lower handset units in emerging regions.

Speaker Change: <unk> delivered revenues of $9 5 billion and EBT margin of 30% with revenues at the high end of our guidance due to upside across handsets Iot and automotive.

Akash Palkhiwala: due to upside across handsets, IoT and automotive. QCT handset revenues grew 12% year over year to $6.9 billion, reflecting the benefit of increased premium tier Android chip. QCT IoT revenues of $1.6 billion increased 27% versus a year ago period driven by demand for our products with connectivity, processing and AI technology. We delivered QCT automotive revenues of $959 million, reflecting 59% year-over-year growth on increased content in new vehicle launches with our Snapdragon digital chassis platform.

Speaker Change: City handset revenues grew 12% year over year to $6 $9 billion, reflecting the benefit of increased premium tier Android shipments.

Speaker Change: The city Iot revenues of $1 $6 billion increased 27% versus a year ago period, driven by demand for our products with connectivity processing and AI technologies we.

Speaker Change: We delivered Q city automotive revenues of $959 million, reflecting 59% year over year growth on increased content in new vehicle launches with our snapdragon digital chassis platforms.

Akash Palkhiwala: Lastly, we return $2.7 billion to stockholders, including $938 million in dividends and $1.7 billion in stock repurchases.

Speaker Change: Lastly, we returned $2 7 billion to stockholders, including $938 million in dividends and $1 7 billion in stock repurchases.

Akash Palkhiwala: Now turning to guidance. I'll first address the macroeconomic environment, including the impact of tariff. there's uncertainty around the impact of the global trade landscape on demand across our business.

Speaker Change: Now turning to guidance.

Speaker Change: First address the macroeconomic environment, including the impact of tariffs.

Speaker Change: There's uncertainty around the impact of the global trade landscape on demand across our businesses.

Akash Palkhiwala: Our guidance for the upcoming quarter is based on our current assessment of the financial impact of tariffs as they stand today. As the situation remains dynamic, we'll continue to closely monitor for potential changes.

Speaker Change: Our guidance for the upcoming quarter is based on our current assessment of the financial impact of tariffs as they stand today.

Speaker Change: As the situation remains dynamic we will continue to closely monitor for potential changes.

Akash Palkhiwala: For the third fiscal quarter, we're forecasting revenues of $9.9 to $10.7 billion and non-cap EPS of $2.60 to $2.80. We estimate QTL revenues to be approximately flat on a year-over-year basis, reflecting normal seasonality for handset units with revenues of $1.15 to $1.35 billion, an EBT margin of 67 to 71 percent. In QCT, we expect revenues of $8.7 to $9.3 billion, an EBT margin of 28 to 30 percent. At the midpoint, this reflects year-over-year revenue growth of approximately 12 percent, led by strength in handsets, IoT, and automotives. We expect QCT hands-up revenues to increase approximately 10% on a year-over-year basis, driven by growth in Android.

Speaker Change: For the third fiscal quarter, we are forecasting revenues of $9 nine to $10 $7 billion and non-GAAP EPS of $2 60 to $2 87.

Speaker Change: We estimate QTL revenues to be approximately flat on a year over year basis, reflecting normal seasonality for handset units with revenues of $1.15 billion to $135 billion and EBT margin of 67% to 71%.

Speaker Change: In Q City, we expect revenues of eight 7% to $9 3 billion and EBT margin of 28% to 30% at the midpoint. This reflects year over year revenue growth of approximately 12% led by strength in handsets Iot and automotive.

Speaker Change: We expect <unk> handset revenues to increase approximately 10% on a year over year basis, driven by growth in Android.

Akash Palkhiwala: We estimate QCT, IoT, and automotive revenues to grow approximately 15% and 20% respectively versus a year ago period, driven by the same factors I outlined in our second quarter results.

Speaker Change: We estimate Q city, Iot and automotive revenues to grow approximately 15, and 20% respectively versus a year ago period, driven by the same factors are outlined in our second quarter results.

Akash Palkhiwala: Lastly, we estimate non-GAAP operating expenses to be approximately $2.25 billion.

Speaker Change: Lastly, we estimate non-GAAP operating expenses to be approximately $2 billion to $5 billion.

Akash Palkhiwala: In closing, we are very pleased with our strong results in the first half of Fiscal 25 with revenue and non-GAP EPS growth of 17% and 21% respectively versus a year ago period.

Speaker Change: In closing, we're very pleased with our strong results in the first half of fiscal 'twenty, five with revenue and non-GAAP EPS growth of 17% and 21% respectively versus a year ago period.

Akash Palkhiwala: We are increasing our capital return target to 100% of free cash flow in Fiscal 25, reflecting confidence in our strong cash flow generation and financial targets outlined at our recent investor desk. As the global trade environment continues to evolve, we remain focused on our execution priorities, including our relationships with customers and partners globally, and investing in our industry leading technology and product roadmaps. Despite the near-term macro uncertainty, our business strategy remains unchanged, and we remain committed to our long-term financial framework. Our disciplined capital allocation and balance sheet flexibility position us for success across varying market scenarios.

Speaker Change: We are increasing our capital return target to 100% of free cash flow in fiscal 'twenty, five reflecting confidence in our strong cash flow generation and financial targets outlined at our recent Investor day.

Speaker Change: As the global trade environment continues to evolve we remain focused on our execution priorities, including our relationships with customers and partners globally and investing in our industry, leading technology and product roadmap.

Speaker Change: Despite the near term macro uncertainty our business strategy remains unchanged and we remain committed to our long term financial framework.

Speaker Change: Our disciplined capital allocation and balance sheet flexibility position us for success across varying market scenarios.

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

Speaker Change: This concludes our prepared remarks back to Ya Marysville.

Mauricio Lopez: Thank you, Akash.

Speaker Change: Thank you <unk> operator, we're now ready for questions.

Operator: Operator, we're now ready for questions. Thank you. To queue a question, press star, then the number 1. To try a 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.

Speaker Change: Thank you.

Speaker Change: A question Press Star then the number one.

Speaker Change: A question press Star two.

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

Speaker Change: One moment please for the first question.

Joshua Buchalter: The first question comes from Joshua Buchalter with T.D. Cowan. Please proceed with your question. Hey, guys, thanks for taking my question and congrats on the solid results in a difficult backdrop. My first question, could you maybe spend a couple minutes talking through what kind of assumptions you're baking into, in particular, your guidance in the handset market? I mean, given there's pretty widespread concerns of tariff related pull-ins, are you seeing any signs of that yet? And in particular, your largest customer was up pretty meaningfully year over year. So was there any change in order patterns there?

Speaker Change: The first question comes from Joshua Buchalter with TD Cowen. Please proceed with your question.

Joshua Buchalter: Hey, guys. Thanks for taking my question and congrats on the solid results in a difficult backdrop.

Joshua Buchalter: My first question could you maybe spend a couple of minutes talking through what kind of assumptions you're baking in to.

Uh huh.

Joshua Buchalter: In particular your guidance in the handset market any given theres pretty widespread concerns of tariff related pull ins are you seeing any signs of that yet and in particular your your largest customer was up pretty meaningfully year over year. So it was it any change in order patterns. There. Thank you.

Akash Palkhiwala: Thank you.

Akash Palkhiwala: Yeah, thanks, Josh, for the question. Our approach on tariffs is really our guidance reflects our current assessment of the financial impact from it. We do not see any material direct impact to us at this point. The landscape obviously is dynamic, so we're closely monitoring, but we're very focused on things we control and very focused on supporting our customers as well. One thing to remember is when you look at our supply chain, we have a very diversified global supply chain and so that positions us very well to navigate challenges that might happen as a result of tariffs.

Joshua Buchalter: Yeah, Thanks, Josh for the question.

Joshua Buchalter: Our approach on tariffs is really our guidance reflects our current assessment of the financial impact from it are we do not see any material direct impact to us at this point.

Joshua Buchalter: The landscape, obviously is dynamic so we're closely monitoring, but we're very focused on other.

Joshua Buchalter: Things, we control and very focused on supporting our customers as well.

Joshua Buchalter: One thing to remember is when you look at our supply chain, we have a very diversified global supply chain and so that positions us very well to navigate the challenges that might happen as a result of tariffs.

Akash Palkhiwala: And then maybe specifically on your question of pull-ins, we have not seen any material pull-ins from our customers, so this reflects kind of reasonable, consistent ordering patterns from them and that's what's reflected in our customers. Understood. Thank you.

Joshua Buchalter: And then maybe specifically on your question of Poland's we have not seen any material pull ins from our customers. So this reflects kind of reasonable consistent ordering patterns from them.

Joshua Buchalter: And that's what's reflected in our guidance.

Joshua Buchalter: Understood. Thank you.

Joshua Buchalter: To follow up, I think a quarter ago, you expressed some optimism, but certainly didn't include any Huawei royalty revenue in the model. Any updates to share on those negotiations? Obviously, given the difficult backdrop to be signing deals right now.

Speaker Change: A follow up I think a quarter ago, you expressed some optimism, but certainly didn't include any huawei royalty revenue in the model any updates to share on those negotiations obviously, given the difficult backdrop to the signing deals right now thank you.

Alex Rogers: Thank you.

Alex Rogers: Josh, this is Alex. There really aren't any updates. Discussions will be ongoing, but we don't have any updates right now.

Alex Rogers: Yeah, Josh this Alex there really aren't any updates our discussions.

Alex Rogers: Going but we don't have any updates right now.

Alex Rogers: Okay.

Samik Chatterjee: The next question is from Samik Chatterjee with J.P. Morgan. Yeah, hi, Samik. It's Akash. So in the IoT area, we saw tremendous growth in the quarter, we reported results. So 27% year over year growth. And we saw growth across all three areas. So consumer, networking and industrial. The largest growth contributor was actually industrial.

Alex Rogers: The next question is from Saturday Chatterji with J P. Morgan. Please proceed with your question Hi.

Saturday Chatterji: Thanks for taking my question. So maybe if I can start on the Iot segment and just in relation to the it seems like that is the segment you saw the most upside relative to your own expectations for the quarter.

Saturday Chatterji: Can just flesh out what drove that upside and maybe just going back to following up on the last question is what I like is that a segment that <unk> seen any evidence of a pull forward of demand and then I have a quick follow up thank you.

Speaker Change: Yeah, Hi, somebody could say gosh, so India Iot area, we saw tremendous growth in the quarter, we reported results of 27% year over year growth and we saw growth across all three areas, so consumer networking and industrial the largest growth contributor was actually industrial.

Akash Palkhiwala: As we've discussed in the past, we have this premise of where the market is going, which is a transition from micro controllers to microprocessors and AI. And, and we're seeing the benefit of our technology portfolio as it applies to that transition. And so we're at the front end of the transition in our minds. And some of the upside in the quarter came through came to the benefit that came from that transition. There may be the last thing I'll highlight is, when you step back and look at all the different areas in our IoT revenue stream, which is PCXR, industrial networking, our technology is becoming more relevant than ever to each of those areas.

Saturday Chatterji: As we've discussed in the past we have this premise.

Saturday Chatterji: Premise of where the market is growing which is a transition from microcontrollers to microprocessors and AI and we are seeing the benefit of our technology portfolio as it applies to that transition and so we're at the front end of the transition in our minds and.

Saturday Chatterji: Some of the upside in the quarter came through came through the benefit that came from that transition than maybe the last thing I'll highlight is when you step back and look at all the different areas in our Iot revenue stream, which is B C XR industrial networking our.

Saturday Chatterji: Allergy is becoming more relevant than ever to each of those areas. So that's what gives us confidence in our long term forecast.

Akash Palkhiwala: So that's what gives us confidence in our long term forecast.

Samik Chatterjee: And then maybe for my follow-up, if I can ask you about your M&A pipeline and strategy here.

Speaker Change: Okay got it and then maybe for my follow up if I can ask you about your M&A pipeline and strategy here.

Samik Chatterjee: Just when I look at Focus AI and Edge Impulse, obviously, I don't know those businesses as closely, but how should we think about some of these acquisitions enhancing the capabilities in the current end markets that you're trying to diversify and enhance your position in relative to maybe some acquisitions adding to the existing end markets and giving you more growth pillars in terms of additional incremental end markets that you can go into with some acquisitions?

Speaker Change: When I look at focus the eye and urgent Bose obviously.

Speaker Change: Do as with most of those closely but how should we think about some of these acquisitions enhancing the capabilities and the current end market that you are trying to diversify.

Speaker Change: And to answer your positioning relative to maybe some acquisitions, adding to the existing end market and I'm, giving you more growth pillars in terms of additional incremental end market that you can go into with some acquisitions. Thank you.

Cristiano Amon: Samik, this is Cristiano. Thanks for the question. Look, this is very consistent to what we said before, and I kind of point you back to the plan we outlined on our last Investor Day. If you look, we have made acquisitions in the past to create our automotive business, which we feel are very confident about how complete our roadmap is. We made acquisitions such as Nuvia, which enable us to create an opportunity in compute. And we have been saying that the next focus for the company was to really augment our IoT space and especially in industrial.

Speaker Change: Some <unk> cristiana. Thanks for the question look this.

Speaker Change: This is very consistent to what we said before and I kind of point you back to the plan, we outlined on our last Investor day.

Speaker Change: If you look we had made acquisitions in the past to create our automotive business, which we feel very confident about how complete our roadmap as we made acquisitions, such as nuclear which enable us.

Speaker Change: To create an opportunity in compute and we have been saying that the next focus for the company was to really augment our Iot space and especially the industrial is a cash outline where we're 100% convinced theres a significant opportunity for advanced computing and AI at the edge and industrial <unk>.

Cristiano Amon: As Akash outlined, we're 100% convinced there's a significant opportunity for advanced computing and AI at the edge in industrial. And what you see us doing with Edge and Pulse, with Focus AI, is actually building a software platform that we can scale our technology to all those different verticals. And we'll probably continue to augment the platform with those types of acquisitions.

Speaker Change: And what you see is doing with edge and post with focus AI exactly building a software platform.

Speaker Change: We can scale, our technology to all of those different verticals and we'll probably continue to augment our platform with those types of acquisitions.

Timothy Arcuri: Our next question comes from Timothy Arcuri with UBS. Please take your question. Thanks a lot.

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

Timothy Arcuri: Thanks, a lot of cost typically September is like seasonally it's up kind of mid singles to high singles I know Theres a lot of uncertainty, but is there anything besides just the macro that you would sort of point us away from thinking of that as like a normal.

Akash Palkhiwala: Akash, typically September is like seasonally, it's up kind of mid singles to high singles. I know there's a lot of uncertainty, but is there anything besides just the macro that you would sort of, you know, point us away from thinking of that as like a normal, you know, Q3? Yeah, Tim, you're right. I mean, as we look at the fourth quarter, obviously, the underlying factor there is the macro environment. And so we've reflected the best information we have today, and we're going to watch, obviously monitor that closely.

Speaker Change: Q3.

Speaker Change: Yes.

Speaker Change: Yeah Tim.

Timothy Arcuri: Youre right I mean, as we look at the fourth quarter, obviously, the underlying factor there is the macro environment and so we've reflected the best information we have today and we're going to watch watch obviously monitor that closely.

Akash Palkhiwala: In QCT, specifically, when you look at Android, automotive and IoT, we expect normal seasonality, both from a quarter over quarter and year over year perspective. And then within the Apple product business, as we've said, we expect our share to go lower in the in the launches that happen in fall 2025. So we're forecasting approximately 70% share in that launch. And the rest of the factors kind of consistent with what you said. Great.

Timothy Arcuri: <unk>, specifically when you look at Android automotive and Iot, we expect normal seasonality, both from a quarter over quarter and year over year perspective, and then within the Apple product business. As we've said, we expect our share to go lower in the odd.

Timothy Arcuri: Indeed launches that happen in fall 'twenty 25, so we are forecasting approximately 70% share in that launch.

Timothy Arcuri: And the rest of the factor is kind of consistent with what you'd expect.

Cristiano Amon: And then just on China, there's a few upsetting factors. I know, I know you did speak about the Unknown Attendee, Samik Chatterjee, Christopher Caso, Tal Liani, Mauricio Lopez, Nakul Duggal, Durga Malladi, Joe Ucuzoglu, Qualcomm Inc.

Timothy Arcuri: Great and then just on China. There is a few offsetting factors I know.

Timothy Arcuri: I know you did speak about the excuse.

Timothy Arcuri: Stimulus, helping the market, but theres also tariffs and trade. So how do you Handicap your China business are you seeing signs of the customers wanting to move away from U S.

Speaker Change: So players like you would move more to media Tech how do you how do you weigh those factors.

Timothy Arcuri: Factors. Thanks.

Cristiano Amon: Hey, Tim, thanks for the question. This is Cristiano. Look, at this point, we, we feel their position is strong, because it has to do with how unique our product is, and how relevant our product is for the global ambition of our customers. I think we, we remind everyone that when when we look over China exposure, there are the products that stay within China, but there is a significant volume that goes from China to the rest of the world. And I think that's what drives uniqueness, I think, of the Snapdragon position there. And, and there are a couple of data points.

Timothy Arcuri: Hey.

Timothy Arcuri: Tim Thanks for the question just Cristiana look at this point, we we feel their position is stronger because it has to do with how unique our product is and how relevant our product has for the global ambition for a cup of our customers I think we.

Timothy Arcuri: We remind everyone that when we look at our China exposure there are the products that stay within China, but there is a significant volume that goes from China to the rest of the world and I think that's what drives you.

Timothy Arcuri: Uniqueness I think of the Snapdragon position there and there are a couple of data points I think just a couple of weeks ago. We had the Shanghai Auto show, we had a number of new partnerships, including.

Cristiano Amon: I think just a couple weeks ago, we had the Shanghai Auto Show, we had a number of new partnerships, including an expansion of the pipeline when new design wins in auto, we have seen no signs of a slowdown in design traction on Qualcomm products within our Chinese base. And that includes smartphones, PC, automotive, XR, and we're excited about some traction in industrial as well.

Timothy Arcuri: An expansion of the pipeline with new design wins in auto we have seen no signs of a slowdown in design traction on Qualcomm products are within our Chinese based and that includes.

Timothy Arcuri: Smartphones PC automotive XR and we're excited about some traction in industrial as well. Thank you.

Stacy Rasgon: Our next question is from the line of Stacy Rasgon with Bernstein. Please receive your question. Hi guys, thanks for taking my questions. Um, I wanted to first ask you about a chipset gross margin. So it looks like they were down a bit in Q2, maybe, maybe 90 dips or so. They seem like they're being guided up, you know, similar amount in Q3. But like, why were they down in Q3, in Q2, especially given with these with enhanced sets, the presumed mix toward more premium, given the weakness in the emerging, in the emerging region smartphones that you talked about?

Our next question is from the line of Stacy restaurant with Bernstein. Please proceed with your questions.

Stacy Rasgon: Hi, guys. Thanks for taking my questions.

Stacy Rasgon: Wanted to firstly ask about our chipset gross margin. So it looks like they were down a bit in Q2, maybe maybe 90 bps or so it seemed like they're being guided up a similar amount in Q3, but like why were they down in Q3, and Q2, especially given where these within handsets are presumed mix toward more premium given the weakness in the emerging.

Stacy Rasgon: Emerging region smartphones that you talked about.

Akash Palkhiwala: Was it just mixed between like the different segments? Or just like what was going on there?

Stacy Rasgon: It is mixed between like the different segments or just like what was going on there.

Akash Palkhiwala: Yeah, so Stacy, this is Akash. It's really the mix across tiers and segments as well, right? We saw some upside that came through on lower tiers that kind of made us very small difference in gross margin. But kind of when you step back and think about broader gross margin trend, we're pretty pretty happy with kind of both our actuals and guidance and there's no new information versus what we've told you before. It's just how the mix plays out between quarters.

Stacy Rasgon: Yeah. So Stacy this is gosh it it's it's really the mix across tiers and segments as well right. We saw some upside that came through on lower tiers.

Stacy Rasgon: That kind of made us very small difference in gross margin, but kind of when you step back and think about broader gross margin trend of we're pretty pretty happy with the cut off both our actual some guidance and there's no new information versus what we've told you before it's just how the mix plays out between quarters.

Akash Palkhiwala: And for my follow-up, you know, so I know you talked about no direct impact from tariffs, but you said you're baking in what you're seeing. What are you baking in for the indirect? Effective Tariffs. You talked about Android being seasonal, I guess, into September quarter, which doesn't sound like you're baking in or suggesting any potential for demand destruction if tariffs or anything get put back on. How should we be thinking about the actual specific assumptions you're putting on the market in the wake of the current macro and the tariff situation? Sure. So Stacy, what I said is we do not see any material direct impact.

Speaker Change: Got it thank you and for my follow up.

Speaker Change: So I know you talked about no no direct impact from tariffs, but you said you're baking in what you're seeing like what are you baking in for the indirect.

Speaker Change: Effective tariffs like you you talked about Android being seasonal I guess in the September quarter, which doesn't sound like you're.

Speaker Change: Baking in or suggesting any potential for demand destruction, if tariffs or anything get put back back on this how should we be thinking about like the actual specific assumptions, you're putting on the market.

Speaker Change: In the wake of the current macro and the tariff situations. We go through the year.

Stacy Rasgon: Sure. So Stacy what I said is we do not see any material direct impact there is smaller direct impact and some minor changes in demand, we are reflecting that and so it's in our numbers, but nothing that really is significant enough to change the direction of our guidance. So that's that's the data point I was giving in terms of indirect impact that's obviously.

Akash Palkhiwala: There is smaller direct impact and some minor changes in demand. We are reflecting that and so it's in our numbers, but nothing that really is significant enough to change the direction of our guidance. So that's the data point I was giving. In terms of indirect impact, that's obviously something that we're watching closely. Difficult for us to predict that at this point.

Stacy Rasgon: Lee are something that we're watching closely difficult for us to predict that at this point.

Stacy Rasgon: Yeah.

Joe Moore: Our next question is from the line of Joe Moore with Morgan Stanley. Great, thank you. You guys are continuing to show really strong results in auto in what's been a tough market for others. And you know, you're talking about a doubling by fiscal 29 from here.

Speaker Change: Our next question is from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Joe Moore: Great. Thank you.

Speaker Change: You guys are continuing to show really strong results in auto in what's been a tough market for others and Youre talking about a doubling by fiscal 'twenty nine from here.

Cristiano Amon: You know, can you talk about the growth drivers there? When does ADAS start to kick in more as a growth category? And just, you know, what is it that gives you that confidence in that multi year forecast?

Joe Moore: You talk about.

Joe Moore: The growth drivers there windows eight start to kick in more as a growth category and just you know what is it that gives you that confidence in that multi year forecast.

Cristiano Amon: Hi, Joe. This is Cristiano. There are a couple of drivers. I think if you remember when we outlined and disclosed the pipeline, we said one-third of that was ADAS. And we also had, you know, FLEX is really becoming a reality. We have some interesting designs and some upcoming SOPs with a FLEX that has both the digital cockpit and ADAS in the same chipset. But the key drivers of the revenue is really the mixed improvement with more digital cockpit, more computing content, and then ADAS coming up. With ADAS alone, I think we just announced in the quarter, five new designs of ADAS.

Joe Moore: Hi, Joe just a question I know there.

Speaker Change: There are a couple of drivers I think if you if you remember when we outline a disclosed a pipeline. We said one third of that was a desk and we we also had a you know.

Speaker Change: Flex is really becoming a reality, we have some interesting designs and in some upcoming S. O piece with a flex there has moved to digital cockpit and a dash in the same chipset, but the key drivers of the revenue was really the mix improvement with more digital cockpit more computer in contact and then and a desk coming.

When they that's alone I think we just announced in the quarter of five new designs of Adas.

Cristiano Amon: And Joe, to quickly add a data point to it, when you kind of step back and look at within the auto market, the car is being transformed, we play in the market that is being transformed. So digitization of car is happening. And we play in the area that is actually growing significantly, both in terms of the penetration within the established base of the auto market, but then also the silicon content multiplies as you get into the new new type of cars. And so we are playing in this tremendous growth area within the car market. And that's what you're seeing it on the numbers show up.

Joe Moore: And Joe to quickly out of data pointing to it when you kind of step back and look at within the auto market. The car is being transformed we play in the market that is being transformed so digitization of car is happening and we play in the area that is actually growing significantly both in terms of the penetration within the established base of the auto market.

Speaker Change: But then also the silicon content.

Speaker Change: <unk> as you get into the new new type of cars and so we are playing in this tremendous growth area within the car market and that's what you're seeing in a number show up.

Cristiano Amon: Great, thank you.

Speaker Change: Great. Thank you.

Chris Caso: Our next question is from Chris Caso with Wolf Research. Please proceed. Yes, thank you. The first question is with regard to handsets. And you talked about that being up about 10% year on year. Could you break out, you know, the relative strength of, I guess, the two buckets that would drive that, you know, the China business, and then your other large customer? And you also mentioned, you know, some impact from some of the subsidies that were happening in China. Could you give some more detail of that? And perhaps, you know, is that sustainable demand? Or, you know, would perhaps that cause some some pull forward as well?

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

Chris Caso: Yes. Thank you first question is with regard to handsets and you talked about that being up about 10% year on year could you break out.

Speaker Change: The relative strength of.

Chris Caso: I guess, the two buckets that would drive that.

Chris Caso: China business and then your other large customer and you also mentioned.

Chris Caso: Some impact from some of the subsidies that were happening in China could you give some more detail of that and perhaps.

Chris Caso: Is that sustainable demand or what perhaps that caused some pull forward as well.

Akash Palkhiwala: Yeah, from a subsidy perspective in China, what we've seen is really the total units for the March quarter came in line with expectations. We are continuing to see a stronger mix play out. And this has been a trend for the last several years. So if you think about premium tier handsets over $400, they've increased from 21% of the installed 21% of new devices sold in 2019 to about 30% now in 2024. And so that part of the market is expanding, our customers are gaining share. And that is really what is informing the upside for us both in the results quarter and the guidance quarter.

Chris Caso: Yeah from a subsidy perspective in China, what we've seen is really the total units for the March quarter came in line with expectations.

Chris Caso: We are continuing to see a stronger mix play out and there's been a trend for the last several years. So if you think about premium tier handsets over $400. They have increased from 21% of the installed a 21% of new devices sold in 2019 to about 30% now in 2024 and so on.

Chris Caso: That part of the market is expanding our customers are gaining share and that is really what is informing the upside for us both in the results quarter around the guidance quarter and that's the primary driver of growth for us.

Akash Palkhiwala: And that's the primary driver of growth for us. Got it. Thank you.

Speaker Change: Got it thank you.

Akash Palkhiwala: Um, I guess with regard to the PC business, and you gave some data points on the, in your prepared remarks, I know that your, you know, your product line has changed a bit, so you can attack some lower price points there. You know, what does that mean for the growth of the PC business within IoT this year? And, you know, as you attack some of those lower price points, are the margins on those products similar to, to, to, you know, what your IoT business is today?

Speaker Change: I guess with regard to the PC business and you gave some data points on the in your prepared remarks, I know that you are.

Speaker Change: Your product line has changed a bit so you can attack.

Speaker Change: Attack some lower price points. They are what does that mean for the growth of the PC business within Iot This year and you know.

Speaker Change: As you attack some of those lower price points are the margins on those products similar to our two whats your Iot businesses today.

Akash Palkhiwala: Yeah, so if you if you think about what we've done in the PC business, we started at the at the top of the roadmap, and established ourselves as the performance leader. And since then, we've been, we've introduced a total of four platforms, which addresses PCs all the way down to $600. And then the next generation of chips will come out later this year as well. So very, very happy with how the roadmap is playing out. In terms of design wins, we expect 100 devices to be commercialized. But in 2026, we have greater than 85 design wins today.

Speaker Change: Yeah. So if you if you think about what we've done in the PC business. We started at the at the top of the roadmap and established ourselves as the performance leader and since then we've been we've introduced a total of four platforms, which addresses Pcs all the way down to $600 and then the next Gen <unk>.

Speaker Change: Asian of chips will come out later this year as well so very very happy with how the roadmap is playing out in terms of design wins, we expect 100 devices to be commercialized.

Speaker Change: In 2026, we have greater than 85 design wins today and.

Akash Palkhiwala: And and in terms of applications being ported and games being ported, we have now ported 1400 games onto the platform and 750 native applications. So that's kind of preparing ourselves for ramp in the market. The data point that Cristiano provided in his prepared remarks is for Windows devices greater than 600 in US and the top five EU markets. We have approximately 9% share in the March quarter. So very happy with how the traction is playing out and it positions us to achieve our target.

Speaker Change: And in terms of applications being ported in games being ported we have now ported 1400 games onto the platform and 750 <unk> native applications. So that's kind of preparing ourselves for ramp in the market. The data point that cusano provided in his prepared remarks.

Speaker Change: Is for Windows devices, greater than 600 in U S and the top five EU markets we.

Speaker Change: We have approximately 9% share in the March quarter, So very happy with all the attractions playing out and it positions us to achieve our target.

Akash Palkhiwala: Yeah, I just want to maybe as a reminder, when you go back to our investor day, we're kind of projecting 12% share by fiscal 29. So I think that gives us confidence. We're on the right track.

Speaker Change: Yeah, but just wanted to maybe as a reminder, when.

Speaker Change: When you go back to our Investor day, we're kind of projecting 12% share by fiscal 'twenty nine so I think that gives us confidence.

Speaker Change: We're in on the right track.

Christopher Rolland: Our next question is from the line of Christopher Rolland with Susquehanna. Please receive. Hey guys, thanks for the question.

Speaker Change: Our next question is from the line of Christopher Rolland with Susquehanna International. Please proceed with your question.

Christopher Rolland: Hey, guys. Thanks for the question I guess my first one is if you guys could address maybe competition, whether you guys are seeing either more or less pressure, particularly at the high end.

Christopher Rolland: I guess my first one is, if you guys could address maybe competition, whether you guys are seeing either more or less pressure, particularly at the high end.

Christopher Rolland: And and kind of related.

Cristiano Amon: and kind of related, would you say that CSS designs that might provide APs out of the box for handset OEMs, would you ever consider that a threat or probably just a very low level threat? Thanks for the question, Chris.

Christopher Rolland: Would you say that CSS designs that might provide.

Christopher Rolland: A piece out of the box for insert Oems would you ever consider that a threat or or probably just a very low level of threat to your to your business. Thank you.

Speaker Change: Thanks for the question, Chris I'm, assuming you're you're asking about the competitive landscape in smartphone. So that's what I'm gonna address competitive landscape has not changed for us at all I think.

Cristiano Amon: I'm assuming you're asking about a competitive landscape in smartphones, so that's what I'm going to address. Competitive landscape has not changed for us at all. I think, you know, if we break that down by customer group, I think we have on Samsung a relationship that is very stable. We have been competing for decades with their on Silicon. We have changed the baseline of that business, used to be 50% level, now our baseline share is about 75% level. And we have been, you know, executing multi-year agreements with that customer. So I think no changes in the competitive landscape.

Speaker Change: We if we if we break that down by customer group I think we have on on Samsung a relationship that is very stable we have been competing.

Speaker Change: For decades with their own silicon, we have changed the baseline of that business used to be 50% level in our baseline shares about 75% level.

Speaker Change: And we have been you know executing multiyear agreements with our customers. So I think no changes in the competitive landscape. When you look about the competition for China based customers. The competition's really between two players us and Mediatek I think we like the fact that.

Cristiano Amon: When you look about the competition for China-based customers, the competition is really between two players, us and MediaTek. I think we like the fact that the premium tier has expanded. We always have said it's a large enough market for two players, and that's the competitive landscape we see going forward. Excellent.

Speaker Change: The premium tier has expanded a wee hours has said, it's a large enough market for two players and and that's the competitive landscape, we see going forward.

Speaker Change: Excellent.

Cristiano Amon: And Cristiano, maybe my second one here around AI, you guys have been really successful in AI, you know, adding NPU, adding ASP as a result. But maybe Intel suggested that this isn't the case in PC, they're not getting better ASPs for increasing AI capabilities.

Speaker Change: And Cristiana, maybe maybe my second one here around AI you guys have been really successful and AI are you know, adding N. P. You, adding a S. P. As a result.

Speaker Change: But maybe Intel suggested that this isn't the case in P C. They're not getting better asps for increasing AI capabilities. So I guess my question is I guess first kind of philosophical why why does this work so well in mobile.

Cristiano Amon: So I guess, my question is, I guess, first, kind of philosophical, why does this work so well in mobile? And then for your future products going forward here, do you think there's still that link, more AI, more NPU, more ASP? Or is this an upgrade cycle that's really taken place and kind of ASP expansion from here related to AI might be more This is a great question. Actually, Chris, I love this question. So thank you. I am. So I wanted to unpack this. And I think they're two separate conversations. So I'm going to start with the philosophical as you pointed out.

Speaker Change: And then for your future products going forward here or do you think there is still that link more AI more N. P. You more a S. P or is this an upgrade cycle, that's really taken place and kind of ASP expansion from here related to AI might be more difficult.

Chris Caso: This is a great question, Chris I Love. This question. So thank you I am so I wanted to unpack this and I think they're two separate conversation so I'm going to start with a philosophical as you pointed out.

Cristiano Amon: It's interesting, there's, it seems to be a little bit of an impatience, I think about what's happening with AI, especially when mobile and PCs, but what you have to look is really the trend. And I think that's what's really important. And I will unpack the difference between phone and PC. In phones, it's crystal clear, especially when you look at the maturity of AI today, the ability to have an assistant that does things for you. Even for productivity, you see now more clarity on use cases being developed for a smaller screen. When you have a smaller screen, some of those systems are incredibly useful for you.

Chris Caso: It's interesting there is it seems to be a little bit of any patient. So I think about what's happening with AI, especially when mobile and Pcs, but what do you have to look is really the trend and I think that's what's really important.

Chris Caso: And I'll unpack the different the difference between phone and P. C.

Chris Caso: In phones this crystal clear, especially when you look at the maturity of AI today the.

Chris Caso: The ability to have an assistant that does two things for you even for productivity you see now more clarity on use cases being developed for smaller screen. When it's when you have a smaller screen. Some of those systems are are incredibly useful for you and where we are in the cycle right now.

Cristiano Amon: And where we are in the cycle right now, it's kind of similar to what we saw in the feature phone to smartphone transition. You're in the part of the cycle that most of the new features come from the OEM and from the OS provider on AI, and then eventually they're going to start coming from third-party developers, and that's where it gets scaled. So we like the trend, it's driving more NPU content into the phone, it's driving ASP, and it's going to be a game about once this thing is deployed at scale with a number of new use cases, about who can deliver more NPU performance without compromising battery life.

Chris Caso: It's it's kind of similar to what we saw in the feature phone to smartphone transition you are in the part of the cycle. The most of the new features come from the OEM and from the OS provider on AI and then eventually they're going to start coming from third party developers and that's where he gets scale. So we like the trend is.

Chris Caso: Driving more N P. You content into the phone is driving.

Chris Caso: And it's going to be a game.

Chris Caso: Once this thing is deployed at scale with a number of new use cases about who can deliver more NPL performance without compromising battery life and I think that's kind of most of our investments in this area. We like everything we see I think theres inpatients people expected everybody like tomorrow to buy an AI smartphone, but the.

Cristiano Amon: And I think that's kind of most of our investment is in this area. We like everything we see. I think there's impatience, people expected everybody like tomorrow to buy an AI smartphone, but the trend is good and it gets measured by the number of use cases where the beginning of third-party developers building use cases.

Chris Caso: Trend is good and again measured by the number of use cases, where the beginning of third party developers building use cases P. C is a little different.

Cristiano Amon: PC is a little different. PC. The first when we enter the PC space, it's about we can deliver multi day battery life and faster CPU in a better form factor. Now, it's the same exec trend, it is a little bit different. I think that's why things like DeepSeek is incredibly helpful understanding a smaller model running on the PC. And for for capabilities that you use AI all the time, there's an economic aspect. of running that on the devices at the edge. So I think what we're seeing right now is we're winning PC designs because we have a better laptop.

Chris Caso: P C.

Chris Caso: The first when we entered the PC space. It's about we can deliver multi day battery life and faster CPU and a better form factor now.

Chris Caso: Now it's the same exact trend it is a little bit different I think that's why things like deep seek is incredibly helpful. Understanding of smaller model running on the P. C and four four capabilities that you use AI all the time there was an economic aspect.

Chris Caso: <unk> running that on all devices at the edge. So I think what we see right. Now is were winning PC designs, because we have a better laptop, it's faster and it's smaller multi day battery life.

Cristiano Amon: It's faster and a smaller multi-day battery life. But the PC, AI, it's just at the beginning. As more and more SaaS companies, especially as they get pressure from competition, smaller models make the cloud and the devices at the edge now competing for inference. You're gonna see more of those use cases and then the NPU is gonna shine. And I think that you started to see that from the OS vendor, Microsoft talks about it a lot because they're building the AI use cases as an OS. But next, you're gonna see that third party and it's gonna be the same dynamics that we see on the phone.

Chris Caso: But the P. C. AI, it's just the beginning as more and more SaaS company, especially as they get pressure from competition.

Chris Caso: Moller models make the cloud and the devices at the edge now competing for inference, you're going to see more of those use cases, and then they N. P was going to shine and I think that you've started to see that from the OS vendor Microsoft talks about it a lot because they are building.

Chris Caso: I use cases, as a know Wes, but next you're going to see that third party and it's going to be the same dynamics that we see on the phone. So we remain encouraged by it I think is going to create a positive cycle and we are investing to have the best N. P. You out there. Thank you.

Cristiano Amon: So we remain encouraged by it. I think it's going to create a positive cycle and we are investing to have the best NPU out there. Thank you.

Chris Caso: Thank you.

Ross Seymour: Our last question is from Ross Seymour with Deutsche Bank. Please receive your question. Hi, guys. Thanks for asking a couple of questions. Akash, they're both going to, I think, be for you. So the first one is, you mentioned about the market share at your US customer going down to about 70% in this generation. I wanted to see what that means on the OPEX front for you. You guys have done a great job of controlling the OPEX dollars.

Chris Caso: Last question is from Ross Seymore with Deutsche Bank. Please proceed with your question.

Speaker Change: Hi, guys. Thanks for asking a couple of questions are cost, they're both going to I think be for you. So the first one is you mentioned about the market share at a U S customer going down to about 70% in this generation.

Speaker Change: Wanted to see what that means on the Opex front for you you guys have done a great job of controlling the opex dollars, but as that business goes away and the trajectory you've said many times before.

Akash Palkhiwala: But as that business goes away in the trajectory, you've said many times before, how does the OPEX change and maybe the margin structure of Qualcomm during that exit from that Yeah, Ross, thanks for the question. I think our strategy around OPEX has been very clear. And we put this in place a couple years ago, where the idea was to keep the existing scale of the OPEX investment, and transition the investment from handsets, while still maintaining leadership in handsets to these new areas that we are focusing on within automotive, and then PCXR and industrial within IoT.

Speaker Change: How does the Opex change and maybe the margin structure of Qualcomm during that exit from that main customer.

Speaker Change: Yeah Ross. Thanks for the question I think our our our strategy around Opex has been has been very clear and we put this in place couple of years ago, where the idea was to keep the existing scale off the opex investment and transition the investment from handsets are while still maintaining leadership in <unk>.

Speaker Change: And such to these new areas that.

Speaker Change: Debt that we were focusing on within automotive and then <unk> XR in industrial within Iot So that.

Akash Palkhiwala: So that is the framework under which we are operating. We're continuing to move investment into those areas to create this tremendous growth opportunities for us. And then on the revenue side, as kind of Apple revenue goes down, we were looking, we're very optimistic that the targets we laid out replaces that revenue, and puts us in a good place from an overall P&L perspective. So that's the framework that we outlined at Investor Day as well. And that's what we're executing.

Speaker Change: That is the framework under which we're operating we're continuing to move investment into those areas to create this tremendous growth opportunities for us and then on the revenue side, that's kind of Apple revenue goes down we were looking we are very optimistic that the targets. We laid out replaces that revenue and puts us in a good place from a.

Speaker Change: Overall P&L perspective so.

Speaker Change: That's the framework that we outlined at Investor day, as well and that's what we're executing on.

Akash Palkhiwala: And one more for you quickly, you guys boosted the free cash flow return to 100% return to shareholders. What was the reasoning behind doing that? I think everybody will obviously take it and it's a positive sign, but just wanted to see what Well, I think we've had very strong cash flow for the last couple years. And so we've seen our cash balance grow. And so it is an opportunity given where the stock price is, it's an opportunity for us to leverage that cash balance and increase, increase our buybacks. But we're doing it while of course, maintaining our strategic flexibility for M&A.

Speaker Change: Okay. Then one more for you quickly you guys boosted the free cash flow returned to a 100% return to shareholders.

Speaker Change: Was the reasoning behind doing that I think everybody will obviously take it and that's a positive sign but just wanted to see what the catalyst was.

Speaker Change: Well I think we've.

Speaker Change: We've had very strong cash flow for the last couple of years and so we've seen our cash balance grill and so it is an opportunity given where the stock prices, it's an opportunity for us to leverage.

Speaker Change: Leverage that cash balance and increase increase our buybacks, but we're doing it while of course, maintaining our strategic flexibility for M&A and it's the same framework, we laid out at Investor day, not fundamentally changing how we think about it but theres an opportunity and we're investing as a result.

Akash Palkhiwala: And it's the same framework we laid out at Investor Day, not fundamentally changing how we think about it. But there's an opportunity and we're investing as Thank you.

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

Operator: That concludes today's question and answer session.

Cristiano Amon: Mr. Amon, do you have anything further to add before adjourning the call? Yes, just a few comments.

Speaker Change: Yes, just a few comments.

Cristiano Amon: Thank you all for listening to our call. I would like to say a big thank you to all of our employees, especially our supply chain teams that have been doing a lot of great work. Thank you for all of our customers. And I just want to leave you with this thought, you know, as we as we navigate those times, you know, this is a company that is not, it's experienced with uncertainty, we always ask ourselves, is our technology relevant? And I think this is a time that we actually never felt stronger about their technology roadmap and how the company's position to be relevant to a number of different industries.

Speaker Change: Thank you all for listening to our call I would like to say a big Thank you to all of our employees, especially our supply chain teams that have been.

Speaker Change: Doing a lot of great work thing for all of our customers and I just want to leave you with this part you know Oh as we as we navigate those times are you know this is a company that is not a it's experience dealing with uncertainty. We always ask yourself is our technology relevant and I think this is a time that we actually never feel stronger about.

Speaker Change: Is there a technology roadmap and how the company is positioned to be relevant to a number of different industries. So that's her northstar will continue to execute to that and I'm looking forward to see you all into next quarter. Thank you.

Cristiano Amon: So that's our North Star. We'll continue to execute to that.

Cristiano Amon: And I look forward to see you all in the next quarter. Thank you.

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

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

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