Q3 2025 Qualcomm Inc Earnings Call
Mauricio Lopez: Ladies and gentlemen, thank you for standing by. Welcome to the QUALCOMM's third quarter fiscal 2025 earnings conference call. At this time, all participants are in listener-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 one on your telephone keypad. To withdraw your question, press star then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Please submit your questions to one question and one follow-up. As a reminder, this conference is being recorded, July 30th, 2025. The playback number for today's call is 877-660-6853. For international callers, please dial 201-612-7415. The playback reservation number is 13754332. I would now like to turn the call over to Mauricio Lopez-Adoin, Vice President of Investor Relations. Mr. Lopez-Adoin, please go ahead.
Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm, third quarter of fiscal 2025 earnings conference call.
At this time, all participants are in listen-only mode.
Later, we'll conduct a question and answer session.
If you like to ask a question during this time, press start the number 1 on your telephone keypad,
destroy your question, press star, then the number 2.
If you're using a speaker-phone, please pick up your handset before pressing the numbers.
Please have your questions to 1 question and 1 follow-up.
As a reminder, this conference is being recorded. July 30th, 2025.
Is 8776606853.
International callers. Please dial 201-612-7415.
The playback reservation number is 13754332.
I would now like to turn the call over to Mauricio Lopez sidonian vice president of investor Relations Specialist. Please go ahead.
Akash Palkhiwala: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release and a slide presentation that accompanied 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. 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.
Thank you and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Ramen and a cause Paul. Koala in addition, Alex Rogers will join the question and answer session.
You can access our earnings release and a slide presentation. That accompany this call on an investor relations website.
In addition, this call has been webcast on qualcomm.com, and a replay will be available on our website later today.
During the call today, we will use non-GAAP financial measures as defined by regulation G. 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.
Akash Palkhiwala: 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. And now to comments from QUALCOMM's President and Chief Executive Officer, Cristiano Amon.
Actual events or results could differ materially from those projected in our forward-looking statements.
please refer to our SEC filings, including our most recent 10K, which contain important factors that could cause actual results to differ materially from the forward-looking statements,
Cristiano Amon: Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered revenues of $10.4 billion and non-GAAP earnings per share of $2.77, which was near the high end of our guidance range. Our chipset business delivered revenues of $9 billion, reflecting strength in automotive and IoT and ongoing growth in handsets. Automotive and IoT revenues increased 21% and 24% year-over-year, respectively. Our licensing business revenues were $1.3 billion. Our momentum in automotive and IoT is the result of strong execution of our growth and diversification strategy. We remain on track to meet our fiscal '29 target for combined automotive and IoT revenues of $22 billion. We're forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non-Apple revenues. I will now share some key highlights from the business.
And now the comments from qualcomm's president and chief executive officer Cristiano Moines.
Thank you, Mauricio, and good afternoon, everyone. Thanks for joining us today. In fiscal Q3, we delivered revenues of $10.4 billion and non-GAAP earnings per share of $2.77, which was near the high end of our guidance range.
Our chipset business delivered revenues of 9 billion dollars reflecting strength in automotive and iot and ongoing growth in handsets.
Automotive and IoT revenues increased 21% and 24% year-over-year, respectively. Our licensing business revenues were $1.3 billion.
Our momentum in automotive and IoT is the result of strong execution of our growth and diversification strategy. We remain on track to meet our fiscal 2029 target for combined automotive and IoT revenues of $22 billion.
We're forecasting fiscal 2025 to be the second consecutive year of greater than 15% year-over-year growth in total QCT known Apple revenues. I will now share some key highlights from the business.
Cristiano Amon: In handsets, we extended our Xiaomi collaboration with a multi-year agreement. Snapdragon 8 Series platforms will power multiple generations of Xiaomi's flagship devices for China and global markets, with volume increasing each year of the agreement. The Snapdragon 8 Elite continues to set the pace of innovation in mobile processors and is leading the transition to AI smartphones with 124 designs shipped or announced to date. AI usage in smartphones is increasing. For example, Samsung noted that 70% of Galaxy S25 users are utilizing Galaxy AI, and usage of Google Gemini AI has nearly tripled among S25 users compared to the S24. Looking ahead, we expect the range of on-device and agentic AI use cases will continue to expand and reshape the mobile industry. We're optimistic about the Android ecosystem's leadership in AI.
In handsets, we extended our xiaomi collaboration with a multi-year agreement.
Snapdragon 8 series platforms with power; multiple generations of Xiaomi's flagship devices for China and global markets, with volume increasing each year of the agreement.
The Snapdragon 8 Elite continues to set the pace of innovation in mobile processors and is leading the transition to AI smartphones, with 124 designs shipped or announced today.
AI usage in smartphones is increasing. For example Samsung noted the 70% of Galaxy. S25 users are utilizing Galaxy Ai and usage of Google Gemini AI has nearly tripled among s25 users compared to the s24.
Cristiano Amon: As we reach the one-year mark of our entry into AI PCs, we are encouraged by the steady progress we're seeing with our Snapdragon X Series platforms. Multiple new devices launched during the quarter from leading OEMs such as Acer, Dell, HP, Lenovo, Microsoft, and Samsung, and we remain on track for more than 100 designs to be commercialized through 2026. Snapdragon is transforming personal computing experiences, and the design traction we're seeing from major customers reflects confidence in our technology roadmap, product portfolio, and long-term commitment to PCs. In the second calendar quarter of 2025, according to third-party sources, Snapdragon-based PCs continue to make up approximately 9% of Windows laptops sold above the $600 price tier in retail US and the top five European countries.
Looking ahead, we expect the range of owned devices in a Gentech. AI use cases will continue to expand and reshape the mobile industry. We are optimistic about the Android ecosystem's leadership in AI.
As we reach the 1-year Mark of our entry into aipc, we are encouraged by the steady progress. We're seeing or for Snapdragon X Series platforms.
Multiple new devices launched during the quarter. From leading oems such as Acer Dell HP Lenovo Microsoft and Samsung and we remain on track for more than 100 designs to be commercialized through 2026.
Snapdragon is transforming personal computing experiences in the design traction. We're seeing from major customers reflect confidence in our technology roadmap, product portfolio, and long-term commitment to PCs.
In the second calendar quarter of 2025, according to the third-party sources, Snapchat, and bass PCS continue to make up approximately 9% of Windows laptops. So above the 600 price, tier in retail us and the top 5 European countries.
Cristiano Amon: While we are at the beginning of our journey into PCs, we remain excited about the long-term opportunity and continue to work toward our target of achieving $4 billion in revenue by fiscal '29. In XR, Snapdragon continues to be the platform of choice for smart glasses and mixed reality devices. We now have 19 designs from our global partners. Demand for Meta's AI smart glasses continues to exceed expectations, and they recently expanded the portfolio with the launch of the new Meta Oakley smart glasses and introduction of new Ray-Ban styles. Xiaomi's new AI glasses launched in the quarter were also well-received. All three are powered by the Snapdragon AR1 Gen 1 platform. At the Augmented World Expo USA, we conducted the world's first demonstration of a 1 billion parameter model running locally on smart glasses powered by our next-generation Snapdragon AR platform.
Are at the beginning of our journey into PCS. We remain excited about the long-term opportunity and continue to work toward our Target of achieving 4 billion dollars in Revenue by fiscal 29.
In XR Snapdragon continues to be the platform of choice. For smart glasses and mixed reality devices. We now have 19 designs from our Global Partners,
Demand for Meta AI smart glasses continues to exceed expectations. They recently expanded the portfolio with the launch of the new Meta smart glasses and the introduction of new Ray-Ban styles.
Cristiano Amon: We also introduced a smart ring controller reference design as a new input device for discreet and intuitive interactions. Our Snapdragon digital chassis solutions continue to see strong traction across the automotive ecosystem, with 12 new designs during the quarter and a total of 50 vehicle launches this fiscal year. We're incredibly excited about BMW's upcoming NOIA class vehicles, which will launch globally with our new ISO safety-certified ADAS stack later this year. This will include our Snapdragon Ride platforms and our jointly developed driving stack, which meets safety standards in the US and Europe. More details about the deployment, certifications, and capabilities will be shared at the IAA Mobility Show in September. Our Snapdragon Ride platforms and driving stack are also gaining momentum more broadly, with 20 OEMs' programs for various highway and urban navigation on autopilot solutions.
Xiaomi's new AI glasses launched in the quarter were also well received. All three are powered by the Snapdragon AR1 Gen 1 platform. At the Augmented World Expo in the USA, we conducted the world's first demonstration of a 1 billion parameter model running locally on smart glasses powered by our next-generation Snapdragon platform. We also introduced a smart ring controller reference design as a new input device for discrete and intuitive interactions.
Our Snapdragon digital chassis Solutions continue to see strong traction across the automotive ecosystem, with 12, new designs, during the quarter. And a total of 50 vehicle launches this fiscal year.
We're incredibly excited about BMW's upcoming Noya class vehicles, which will launch globally with our new ISO safety certification, Aztec, later this year.
This will include our Snapdragon ride platforms and our jointly developed driving stack, which meet safety standards in the US and Europe. More details about the deployment certifications, and capabilities will be shared.
Cristiano Amon: The majority of these programs will launch in the next 18 months across all global regions. In industrial IoT, we continue to expand our ecosystem of partners, and we're pleased with the traction of our Dragon Wing platforms. At Computex, we announced new collaborations with Digiwin and Itina to utilize our AI on-prem appliance solution and AI inference suites for enterprise automation. We also expanded our work with IBM on their Maximo AI assistant powered by Watson X AI. Our broad range of OEMs and partners now includes companies such as Asus IoT, Dell, Everfocus, iBase, Lenovo, Deloitte, EN, Humane, Palantir, and many others.
At the IAA Mobility Show in September, our Snapdragon ride platforms and driving stack are also gaining momentum. More broadly, we have 20 OEM programs for various highway and urban navigation on autopilot solutions. The majority of these programs will launch in the next 18 months across all global regions.
In industrial IoT, we continue to expand our ecosystem of partners. And we're pleased with the traction of our Dragon Wing platforms.
A computex, we announced new collaborations with Digi win and itina to utilize. Our AI on-prem Appliance solution in AI inference. Suites for Enterprise automation, we also expanded our work with IBM on their maximum, AI assistant, powered by Watson xai, our broad range of oems and partners. Now includes companies, such as Asus iot Del ever focused. Eye base Lenovo Deo e and
Cristiano Amon: We're also gaining traction with our industrial-grade Dragon Wing IQ series, with up to 100 TOPS of AI inference performance, as well as the Dragon Wing Intelligent Video Suite, a platform designed to extract intelligence from any video frame and create intelligent reasoning workflows for enterprises across many verticals. We've also seen continued strength in edge networking, driven by strong demand for Wi-Fi 7 gateway platforms across retail and carrier customers, and for 5G-enabled fixed wireless access platforms for our carrier customers. Now, I would like to provide an update on our expansion into the data center. This represents a new growth opportunity for QUALCOMM and is a logical extension of our diversification strategy as we continue to demonstrate leadership in CPU performance and NPU efficiency.
Humane palantir and many others. We're also gaining traction with our industrial-grade dragon wing IQ series with up to a 100 tops of AI inference performance as well as the dragon wing intelligent video Suite, a platform designed to extract intelligent from any video frame, and create intelligent reasoning, workflows for Enterprises across many verticals.
We've also seen continuous strength in Edge, networking driven by strong. Demand for Wi-Fi. 7 Gateway platforms, across retail, and carrier, customers, and for 5G, enable, fixed wireless access platforms for our carrier customers.
Now, I would like to provide an update on our expansion into the data center.
Cristiano Amon: As inference gains scale, cloud service providers are building dedicated inferencing clusters focused not only on performance but also efficiency, specifically tokens per dollar and tokens per watt. These factors, combined with the shift from merchant x86 CPUs to custom ARM-compatible CPUs for both cloud computing and AI head node, create an entry point for QUALCOMM. We're currently building NPU-based AI inference accelerator cards, as well as custom SoCs for general purpose and AI head node compute solutions utilizing our Orion CPU. We also reached an agreement to acquire AlphaWave IP Group PLC, a global leader in high-speed wire connectivity and compute technologies for data centers, AI, data networking, and data storage. The acquisition is expected to close during the first calendar quarter of 2026, subject to customary closing conditions.
This represents a new growth opportunity for Qualcomm and is a logical extension of our diversification strategy. As we continue to demonstrate leadership in CPU, performance and npu efficiency.
As inference game scale cloud, service providers are building dedicated inferencing. Clusters Focus, not only on performance but also efficiency specifically tokens per dollar and tokens per watt. This factors combined with the shift from Merchants x86 CPUs to custom arm, compatible CPUs for both cloud computing and AI head node. Create an entry point for Qualcomm.
We're currently building npu base, AI inference accelerator cards as well as custom soc's for general purpose and AI head node compute Solutions, utilizing our Orion CPU.
Cristiano Amon: AlphaWave's leading IP and data center design capabilities are key assets that will complement our Orion CPU and Hexagon NPU processors and help accelerate our roadmap. While we are in the early stages of this expansion, we are engaged with multiple potential customers and are currently in advanced discussions with a leading hyperscaler. If successful, we expect revenues to begin in the fiscal '28 timeframe. Additionally, we signed an MOU with Humane to develop AI data centers in Saudi Arabia and deliver highly efficient and scalable cloud-to-edge hybrid AI inferencing solutions for local and international customers. We also announced that our Orion CPUs can be integrated with NVIDIA GPUs for high-performance NVIDIA AI factories using the NVIDIA NVLink Fusion architecture. We will provide further updates as we make progress.
Subject to customary closing conditions.
Alpha Waves, leading IP and data. Center design capabilities are key assets. That will complement our Orion, CPU and hexagon npu processors and help accelerate our road map.
While we are in the early stages of this expansion, we are engaged with multiple potential customers in our currently in advanced discussions with a leading hyperscaler. If successful we expect Revenue to begin in the fiscal 28 time frame. Additionally, we signed an mou with Humane to develop AI data centers in Saudi Arabia, and deliver highly efficient, and scalable Cloud to Edge, hybrid AI inferencing, solutions for local and international customers.
We also announced that our Orion CPUs can be integrated with Nvidia gpus for high performance. Nvidia AI factories using the Nvidia nvlink Fusion architecture. We will provide further updates as we make progress.
Cristiano Amon: Over the past 12 months, we have continued to see AI and generative AI advance at an accelerated rate, and we're both excited and confident in the opportunities this is creating for QUALCOMM across all our businesses. As Gen AI changes the human-computer interface and agentic AI experiences continue to evolve, the mobile industry is being redefined, and a new generation of personal AI devices is emerging. Smart glasses and wearables, such as smartwatches, earbuds, and other form factors, are being transformed into personal AI devices as they connect the user directly to the AI agent and model. These devices are quickly transitioning from simply extending smartphone experiences to now providing new and unique personalized AI and agentic use cases. These devices will evolve independently of the smartphone ecosystem and become a significant opportunity.
Over the past 12 months, we have continued to see AI and generative AI advance at an accelerated rate, and we are both excited and confident in the opportunities this is creating for Qualcomm across all our businesses.
As Genai changes the human computer interface in a genetic AI experiences. Continue to evolve. The mobile industry is being redefined in a new generation of personal. AI devices are emerging
Cristiano Amon: Given our technology leadership in mobile, XR, and wearables, and the breadth of our P and product portfolio, we expect to be the industry's preferred solution provider in this new category. Specifically, personal AI devices will require Snapdragon's always-on cloud connectivity, 5G and micropower Wi-Fi, power-efficient processing, on-device AI, best-in-class imaging, audio, video, sensors, and context capabilities. Meta AI smart glasses are currently the best example of personal AI. We're very optimistic about the trends we see in this area, with major AI players, application developers, and device makers investing in this space. Physical AI is another technology that is reshaping industries and creating new opportunities, particularly in robotics. Robotics require high-performance computing, including powerful on-device AI, extended battery life, reliable connectivity, a higher level of silicon integration, and advanced computer vision and sensor fusion to interpret and understand real-world information in real time and make decisions locally.
Smart glasses and wearables, such as smart watches, earbuds, and other form factors, are being transformed into personal AI devices as they connect the user directly to the AI agent and model. These devices are quickly transitioning from simply extending smartphone experiences to now providing a new and unique, personalized AI in a genuine use case. These devices will evolve independently of the smartphone ecosystem and become a significant opportunity. Given our technology leadership in mobile XR and wearables, as well as the breadth of our product portfolio, we expect to be the industry-preferred solution provider in this new category. Specifically, personal AI devices will require Snapdragon's always-on cloud connectivity, 5G, micro power Wi-Fi, power-efficient processing, and on-device AI.
Best-in-class imaging, audio, video, sensors, and context capabilities.
Meta, AI. Smart glasses are currently the best example of personal AI. We're very optimistic about the trends, we see in this area with major AI players application developers and device makers investing in this space.
Physical AI is another technology that is reshaping industries and creating new opportunities, particularly in robotics.
Cristiano Amon: These requirements are perfectly aligned with our strengths and our technology and product portfolio. Our right to play in this new segment is similar to our expansion into automotive. Furthermore, our experience in industrial and safety-grade silicon, perception and sensing technologies, and ADAS and autonomy provide a very competitive foundation to develop highly differentiated solutions for autonomous robots, next-generation industrial automation, and humanoid robotics. We're incredibly excited about this opportunity, for which third-party estimates indicate a potential TAM of $1 trillion in the next decade. I would now like to turn the call over to Akash.
Robotics require high performance Computing, including powerful on-device AI, extended battery life, reliable connectivity. A higher level of silicon, integration and advanced computer vision. And Sensor Fusion to interpret and understand real world information and real time and make decisions locally.
This requirements are perfectly aligned with our strengths and our technology and product portfolio. Our right to play in this new segment is similar to our expansion into Automotive. Furthermore, our experience in industrial and safety grade silicon perception, and sensing Technologies and AAS, and autonomy, provide a very competitive Foundation to develop, highly differentiated solutions for autonomous robots. Next Generation Industrial Automation, and humanoid robotics. We're incredibly excited about this opportunity for which third-party estimates indicate a potential Tam of 1 trillion dollars in the next decade.
I would now like to turn the call over to Akash.
Akash Palkhiwala: Thank you, Cristiano. Good afternoon, everyone. Let me begin with our third fiscal quarter results. We delivered revenues of $10.4 billion and non-GAAP EPS of $2.77, which was near the high end of our guidance range. QTL revenues of $1.3 billion and EBT margin of 71% were above the midpoint of our guidance. QCT delivered revenues of $9 billion and EBT of $2.7 billion, with year-over-year growth of 11% and 22%, respectively. QCT EBT margin of 30% was at the high end of our guidance range. QCT handset revenues increased 7% year-over-year to $6.3 billion, reflecting strong demand for premium-tier handsets enabled by our Snapdragon 8 Elite platform. QCT IoT revenues grew 24% year-over-year to $1.7 billion. The outperformance relative to expectations was driven by increased demand for our Snapdragon AR1 chipset, the clear industry leader in the emerging AI smart glasses category.
Thank you, Cristiano. Good afternoon, everyone. Let me begin with our third fiscal quarter results.
We deal with revenues of 10.4 billion and non-gaap EPS of $2.77, which was near the high end of our guidance range.
QTL revenues of $1.3 billion and EBT margin of 71% were about the midpoint of our guidance.
Qct delivered revenues of 9 billion. And EBT of 2.7 billion with year-over-year growth of 11 and 22% respectively.
Qct EBT margin of 30%, was at the high of our guidance range.
Platform.
Qct iot revenues grew 24% year-over-year to 1.7 billion.
Akash Palkhiwala: We delivered another record quarter in QCT automotive, with revenues of $984 million, an increase of 21% year-over-year, driven by content growth in new vehicle launches with our Snapdragon digital chassis platform. Lastly, we returned $3.8 billion to stockholders, including $2.8 billion in stock repurchases and $967 million in dividends, aligned with our commitment to return 100% of our free cash flow in the fiscal year. Before turning to guidance, a quick reminder that our fourth quarter in fiscal '25 includes 13 weeks relative to a 14-week quarter in the year ago period. For the fourth quarter, we are forecasting revenues of $10.3 to $11.1 billion and non-GAAP EPS of $2.75 to $2.95. In QTL, we estimate revenues of $1.25 to $1.45 billion and EBT margins of 69% to 73%. In QCT, we expect revenues of $9 to $9.6 billion and EBT margins of 27% to 29%.
The output performance relative to expectations was driven by increased demand for our Snapdragon. Ar1 chipset, the clear industry leader in emerging AI smart glasses category.
We delivered another record quarter in QCT Automotive with revenues of $984 million, an increase of 21% year-over-year, driven by content growth in new vehicle launches with our Snapdragon digital chassis platform.
Lastly, we returned 3.8 billion to stockholders, including 2.8 billion in stock repurchases and 967 million in dividends aligned with our commitment to return 100% of our free cash flow in the fiscal year.
Before turning to guidance a quick reminder that our fourth quarter and fiscal 25 includes 13 weeks relative to a 14 week quarter in the year ago. Period.
For the fourth quarter, we are forecasting revenues of 10.3 to 11.1 billion and non-gaap EPS of $2.75 to $2.95.
In qtl, we estimate revenues of 1.25 to 1.45 billion and EBT. Margins of 69 to 73%.
Akash Palkhiwala: We anticipate QCT handset revenues to grow approximately 5% sequentially, consistent with typical historical trends, despite lower Apple revenues. We estimate QCT IoT revenues to be flat sequentially and QCT automotive revenues to reach $1 billion in the fourth fiscal quarter. Lastly, we estimate non-GAAP operating expenses to be approximately $2.35 billion in the quarter. In closing, we're very pleased with our performance in fiscal '25 as we continue to execute on the financial metrics we outlined at our Investor Day last year. Based on the midpoint of our guidance, we're positioned to deliver revenue and non-GAAP EPS growth of 12% and 16%, respectively, relative to fiscal '24. We are forecasting fiscal '25 to be the second consecutive year of greater than 15% year-over-year growth in total QCT non-Apple revenues.
In QCT, we expect revenues of $9 to $9.6 billion and EBT margins of 27% to 29%.
We anticipate QCT handset revenues to grow approximately 5% sequentially, consistent with typical historical trends, despite lower Apple revenues.
we estimate qct iot revenues to be flat sequentially and qcd Automotive revenues to reach 1 billion dollars in the fourth fiscal quarter.
Lastly, we estimate non-GAAP operating expenses to be approximately $2.35 billion in the quarter.
In closing, we are very pleased with our performance in fiscal 2025. As we continue to execute on the financial metrics we outlined at our Investor Day last year.
Based on the midpoint of our guidance, we have positioned to deliver revenue and non-gaap EPS. Growth of 12% and 16% respectively relative to fiscal 24.
Akash Palkhiwala: We anticipate QCT IoT and automotive revenues to grow by approximately 20% and 35%, respectively, reinforcing our confidence in achieving our fiscal '29 target of $22 billion in combined automotive and IoT revenues. We are pleased to see our customer relationships strengthening during a time of global trade volatility, including the upcoming global ADAS launch with BMW and the recently signed strategic agreement with Xiaomi. We remain focused on maximizing shareholder returns by executing across a broad range of growth and diversification opportunities while maintaining operating discipline. Lastly, I'd like to invite you to tune into our upcoming Snapdragon Summit event, taking place on September 23rd to 25th, to learn more about our technology leadership and new product launches. This concludes our prepared remarks. Back to you, Mauricio.
We are forecasting fiscal 25 to be the second consecutive year of greater than 15% year-over-year growth in total qct non-apple revenues.
We anticipate QCT IoT and automotive revenues to grow by approximately 20% and 35%, respectively, reinforcing our confidence in achieving our fiscal 2029 target of $22 billion in combined automotive and IoT revenues.
We are pleased to see our customer relationship strengthening during a time of global trade volatility, including the upcoming Global AAS launch with BMW and the recently signed strategic agreement with Xiaomi.
We remain focused on maximizing shareholder, returns by executing across a broad range of growth and diversification opportunities. While maintaining operating discipline,
Lastly, I'd like to invite you to tune in to our upcoming Snapdragon Summit event taking place on September, 23rd to 25th.
To learn more about our technology leadership and new product launches.
Mauricio Lopez: Thank you, Akash. Operator, we're now ready for questions.
This concludes our prepared remarks back to you, Mauricio.
Thank you, Kosh operator. We're now ready for questions.
Operator: Thank you. To queue a question, press star then the number one. To withdraw your question, press star two. If you're using a speakerphone, please pick up your handset before pressing the numbers. One moment, please, for the first question. Our first question comes from the line of Joshua Blechhauser with TD Cowan. Please receive your questions.
Thank you.
Take care. To ask a question, press star 1. To withdraw your question, press star 2.
If you're using a speaker-phone, please pick up your handset before pressing the numbers.
Hold on, please. For the first question.
Speaker 5: Hey, guys. Thanks for taking my question. I wanted to start with the handset market. I think you just spoke to 5% growth in the September quarter, despite the lower share that you've communicated at Apple. Can you speak to the drivers there? I mean, I think Xiaomi was up meaningfully in the quarter, which is typical in the June quarter. But I think investors are worried about some level of pull-ins. Are you seeing any evidence of that specifically related to China? Thank you.
First, our first question comes from the line of Joshua Buckhalter with TD Cowen, please receive your questions.
Hey guys, thanks for taking my question. Um, I wanted to start with the handset market. I think you just spoke to 5% growth in the September quarter, despite the, you know, the lower share of the EV communicated at Apple. Can you speak to the drivers there? I mean, I think Xiaomi was up meaningfully in the quarter, um, which is typical in the June quarter. Um, but, you know, I think investors are worried about some level of pull-ins. Are you seeing any evidence of that, specifically related to China? Thank you.
Akash Palkhiwala: Hi, Josh. It's Akash. We're not seeing any evidence of pull-in. I think the upside that we guided in the September quarter in handset revenue stream is really driven by our new product launch. As I mentioned in my prepared remarks, we're going to announce our new chip at the end of September, and we are already working with several OEMs for the launch of new devices based on a tremendous interest in it. And what you're seeing is really people getting ready for the launch of new devices.
Hi Josh, it's Akash. Uh, we're not seeing any evidence of Poland. I think, uh, the upside that we guided in the September quarter, and that Revenue stream is really driven by our new product launch. As I mentioned in my prepared remarks, we're going to announce our new chip at the end of September. And we are already working with several OEMs for the launch of new devices based on a tremendous interest in it. What you're seeing is really people getting ready for the launch of new devices.
Speaker 5: Got it. Thank you. And to follow up, I wanted to ask about the data center business and the hyperscale engagement you mentioned specifically. Any details you can give us on the scope of that engagement? Is that for an ARM-based CPU? Is it an accelerator? And you mentioned fiscal 2028 is potential if that converts. Is that the right timeframe to think about contribution from your data center business more broadly at other customers as well? Thank you, and congrats on the results.
Hurts. Is that the right time frame to think about contribution from your data center business? Uh more broadly at other customers as well. Thank you and congrats on the results.
Akash Palkhiwala: Thank you. Thank you, Josh. This is Cristiano. We can't really disclose more other than what we said in the script. We are in advanced discussions. We have been executing on a product. As we said before, we always felt that we had IP that was very relevant to the data center. I think the AlphaWave provides complementary IP, allowing us to build custom SoC products. And we're pleased with the way we're developing this. I am sure we'll be able to share more as we probably conclude some of those discussions.
Thank you. Thank you, Joshua. This is Cristiano. We can't really disclose more other than what we said in the script. We are in advance, uh, discussions. We have been, uh, executing on a product. Um, as we said, uh, before, uh, we always felt that we had IP. They were very relevant to the data center. I think the alpha wave provides complimentary IP allow us to build custom, uh, SOC products and, uh, we're pleased with the way we're developing this. I am sure it will be able to share more as as we probably conclude some of those discussions.
Operator: Our next question is from the line of Sameer Chatterjee with JPMorgan. Please receive your questions.
Our next question is from the line of SMI chattery with JP Morgan. Please receive your questions.
Speaker 5: Hi. Thanks for taking my questions. Cristiano, maybe I can follow up on the data center roadmap here or the sort of thought process and strategy around it. Less so maybe timing, but in terms of how do you envision sort of AlphaWave integrating into the sort of portfolio or the stack capability that you have currently? And in relation to just thinking about sort of how you're going about selecting customers that you want to approach for this, what's typically sort of in terms of thinking about customization relative to standardization of the chipsets, how you're sort of thinking about deal sizes that would make sense for you in the longer run for this business? Any thoughts around that? Thank you. Can I follow?
Um, hi. Um, thanks for taking my questions. Uh, Christina, maybe I can um follow up on the data center roadmap here or the sort of um.
Thought process and strategy around it. Uh, let's, so maybe timing, but in terms of how do you envision sort of Alpha Wave integrating into these sort of portfolio of the stack? Keep it that you have currently and, uh, in relation to just thinking about sort of how you're going about selecting customers that you want to approach for this, what's typically sort of a, um, in terms of thinking about customization related to standardization of the.
Chipset how you sort of thinking about?
In the longer run for this,
Thoughts around that. Thank you and have a follow-up.
Akash Palkhiwala: Very good. Thank you for your question. I know there's a lot of topics in that question. I'll try to probably give an overview. As we said before and we said in the script, we have been focused on building two products. One is the ability to leverage our CPU asset. And that happens in two situations. One, of course, is a general-purpose CPU. We've been very focused on hyperscalers. They have first-party workloads or ARM-compatible CPU. The other one is the head unit for inferencing clusters. As AI started to get scale and we really look at how we're starting to see inference taking over training, there's a new dynamic in the marketplace, which is about the ability to be efficient with tokens per dollar as well as with energy. That creates an opportunity for us.
Very good. Thank you for your question. I know there's a lot of uh topics in that question. I'm trying to probably give um an an overview.
as as we said it before, and we said in the script, I we have been focused on building 2 products 1,
Akash Palkhiwala: For that, we have been building accelerator cards, and we will be building a rack as well. And those are the two areas that we're building product roadmap. We're very focused on customers. They have the ability to put first-party workloads or inferencing clusters. The AlphaWave IP, it's important. It provides us the ability to scale out and provide connectivity. We believe it's leading connectivity in the industry. And that should inform you the type of customers that we've been focusing on. We think there's a very large TAM. As you know, there is an opportunity for QUALCOMM to play if you have leading IP. Of course, you know as this is a new market for us and we have been planning for it, we're going to be very careful about making disclosures. We're going to wait until they become factual. And we're excited about the engagement we have today.
Is ability to leverage our CPU asset. Um, and that happens in 2 situations 1, of course, is a general purpose. Uh, CPU. Uh, we've been very focused on on hyperscalers. They have first party workloads for armed compatible CPU. The other 1 is the head unit for inferencing, clusters Sai start to get scale and we're really, uh, look of how we're we're. We're starting to see inference, taking over training. Uh, there's a new dynamic in the marketplace, which is about, uh, uh, ability to be efficient with, uh, with tokens per dollar, as well as energy that creates an opportunity for us for that, we have been building accelerator cards and, uh, we will be building Iraq as well. And, uh, and those are the 2 areas. They were Building Product road map, we very focused on customers. They have the ability to put first party workloads or inferencing cluster.
Akash Palkhiwala: We are in advanced negotiations with one significant customer, and hopefully, that creates a halo effect that could validate our platform and create other opportunities down the road. Thank you.
The alpha wave IP is important. It provides us the ability, uh, to scale out and, and provide connectivity. Uh, we believe it's leading connectivity in the industry, and that should inform you. The type of customers that we've been focusing on, we think there's a very large stem as, you know, there is an opportunity for Qualcomm to play if you have leading IP, of course. Um, you know, as this is a new market for us and uh we have been planning for it. We're going to be very careful about making disclosures, we're going to wait until they become factual, and we're excited about the engagement we have today. We are in advance, um, negotiations with 1 significant customer and hopefully that creates a halo effect. Uh, they could validate our platform and create other opportunities down the road. Thank you.
Speaker 5: Thank you for that. And for my follow-up, in the handset business for the fiscal '23 year, you had 7% revenue growth year-over-year, which I think did sort of miss modestly your cutting to last quarter for about 10% growth. So maybe if you can share any color in terms of if you did see any buffers of the month that were weaker than you expected in the quarter. And then maybe similarly, when I think about your guidance for fiscal fourth quarter here, it looked like you're heading toward a high single-digit growth, even with the impact of Apple. So maybe impart it out in terms of what the strength is because that seems like a pretty robust number for fiscal fourth quarter, even with the loss of Apple revenues.
For my follow-up. Um, on in the Hands-On business for the uh, or fiscal 3 you here. Um, you had 7% Revenue growth year-over-year which I think, uh, did sort of missed modestly your your getting.
For 10%.
so, maybe if you can share any color in terms of, um,
Did you see any parts of the market that were weaker than you expected in the quarter? And then, similarly, when I think about your guidance for fiscal Q4 here.
It looks like you're getting to about a high single digit growth even as Apple even with the impact of Apple. So maybe in parted out in terms of this we have the strength is because that seems like a pretty robust number for fiscal force or even with the loss of Apple revenues.
Akash Palkhiwala: Yeah. Sameer, it's Akash. On the third quarter, we had a slightly weaker mix than we had expected. As you know, this is a quarter that is seasonally weaker for us as there are no flagship launches. And that mix is really the weaker mix is more than offset by the strength you're seeing in the September quarter, whereas I mentioned earlier to Josh's question, we're launching the new chip. We have flagship launches coming in at the end of the quarter, and we're seeing the demand increase because of that reason.
Yeah. Uh so I think it's a cash on on on the third quarter, we had a slightly weaker mix than we had expected. As you know, that this is a quarter that is seasonally weaker for us, as there are no Flagship launches.
Mentioned earlier to Josh's question. Uh, we're launching the new chip. We have Flagship launches coming in at the end of the quarter and we're seeing the demand, uh, increase because of that reason.
Operator: Our next question comes from the line of Stacy Rascon with Bernstein Research. Please receive your questions.
Our next question. Commissioner in the line of Stacy rascon with Bernstein research. Please just see you with your questions.
Speaker 5: Hi, guys. Thanks for taking my question. Given the guidance into September, but the dynamics around Apple and everything else, I mean, what would you consider a normal seasonal into the December quarter? And how should we think about drivers as you currently see them against that normal seasonal trend? How should we expect things? If there's anything else funky going on in December that we should know about that would influence results versus what might be more typical?
Hi guys, uh, thanks for taking my question. Given the guidance into September, but the dynamics around Apple and everything else, I mean, what would you consider normal seasonal into the December quarter? And how should we think about drivers?
As you currently see them again that normal see against that seasonal Trend. How should we expect things?
Um, if there's anything else funky going on in December that we should know about that would influence, uh,
Results versus, uh, what might be more typical?
Akash Palkhiwala: Yes. Stacy, it's Akash. Assuming you're asking about the December quarter, we expect normal revenue seasonality for all businesses, of course, adjusted for the lower share in Apple phone launches that we've previously discussed, but nothing else to highlight in all other businesses.
Yes, Stacey. It's like Asha assuming you're asking about the December quarter. Um, no. No, no. We, we expect normal revenue, seasonality for all businesses, uh, of course, adjusted for the lower share in Apple phone launches that we've previously discussed, uh, but nothing else to highlight and all other businesses.
Speaker 5: I mean, what would you consider normal seasonal then?
I mean, what would you consider a normal seasonal in?
Akash Palkhiwala: Well, we're not specifically guiding the quarter at this point, but I think you've seen a trend in the last several years, and you'd expect the same quarterly trend, just adjusted for the lower Apple volume for the share we've provided.
Well, we're we're not specifically guiding the quarter at this point, but I think you've seen a trend in the last several years and and, uh, you would expect the same, uh, same quarterly Trend, uh, just adjusted for the lower Apple volume for the share. We've provided
Operator: Thank you. Our next question is from the line of Joe Moore with Morgan Stanley. Please receive your question. Mr. Moore, your line is live for a question. Perhaps you're on mute. Thank you. Our next question will be from the line of Chris Caso with Wolf Research.
Thank you.
Our next question is from the line of Joe Moore with Morgan Stanley. Please just see you with your question.
Mr. Moore, your line is live for a question. Perhaps you're on mute.
Thank you. Our next question will be from line of Chris queso with full free search.
Speaker 5: Yes, thank you. If I could just expand upon some of the commentary with regard to the December quarter, my understanding is last year, the Chinese OEMs started pulling forward the launch a little bit of some of the flagship devices. Also, you know, as we went last year, there was an extra week in the quarter. So, and I guess maybe just some more granularity on the puts and takes on December, taking that into account. You know, how much of a lift is that in the December quarter? And then does that turn into more of a headwind as you go into the March quarter?
Yes, thank you. Um, if I could just expand upon, you know, some of the commentary with regard to the December quarter, um, it my understanding is last year, uh, the Chinese oems started, pulling forward the launch, a little bit of of, some of the flagship devices also, you know, as we were last year, there was an extra week in the quarter. So, uh, and I guess maybe just some more granularity on the puts and takes, uh, on December, taking that into account. Um, you know, you know how much how much of a lift is that in December quarter. And then uh does that turn into a uh more of a headwind as you go into the March quarter?
Akash Palkhiwala: Yeah, I think, Chris, the business remains very strong. So whether you look at the Android business, automotive, IoT, all the trends continue with the growth rates that we previously outlined for the business. So there's nothing significant or unique that I want to point out there. I think we've talked about the Apple share dynamics, so that is a factor. But outside of that, I think you should think of this as a very strong quarter for us. Seasonally, the strongest quarter for us is December, and that'll still be true regardless of the lower Apple share.
Yeah, I think Chris, uh, the business remains very strong so whether you look at the Android business, uh, Automotive iot all the trends, uh, continue with the growth rates that we have previously outlined for the business. So there's nothing, uh, nothing significant or unique that I want to point out there. I, I think we've talked about the Apple share, uh, Dynamics. So, that is a factor. But outside of that, I think you should think of this as a very strong quarter for us, uh, seasonally the strongest quarter for us is December and that will still be true regardless uh, of uh, the lower aperture.
Speaker 5: Got it. OK. If I could follow on with the data center business, and you understand that you can't talk so much about some of the progress and design wins that you hope to have on that until they become factual. What about from a spending side? And moving into a new line of business, what's going to be the impact on spending? And then as AlphaWave closes, what will be the effect of that on sort of revenue expenses and EPS?
Okay. Um,
so much about uh, uh, you know, some of the progress and design ones that you hope to have on that and until they become factual, what about from a spending side and uh you know, moving into a new line of business uh you know what's going to be the impact on spending and then uh as Alpha wave closest, what will be the effect of that on, you know, sort of Revenue expenses and and eps
Akash Palkhiwala: Yeah, so from a spend perspective, Chris, the way we've managed OPEX over the last several years, you've seen us have very small growth in OPEX over the last four years. And the way we've managed it is really kind of absorbing the salary increases and reallocating existing spend towards diversification and growth. And really, the hiring as we go forward is really going to be focused on new skills that are required to execute on our plan. And so to the extent that there are new skills required to execute on the data center diversification assets, we will invest in that. But outside of that, we plan to be pretty careful managing OPEX going forward.
Yeah, so from a, from a spend perspective, Chris the way we've managed topics over the last several years. You've seen us, uh, very small growth in Opex uh over the last 4 years and the way we managed it is really kind of absorbing the salary increases and reallocating existing spend towards diversification and, uh, and
Growth and and really the hiring uh as we go forward is really going to be focused on new skills that are required to execute on our plan. And so to the extent that there are new skills required to execute on the uh data center diversification assets. Uh, we will, we will invest in that. But outside of that we plan to be pretty careful uh managing Opex going forward.
Operator: Our next question comes from the line of Ross Seymour with Deutsche Bank. Please receive your questions.
Speaker 5: Hi, guys. Thanks for letting me ask a couple of questions. I just wanted to get into the OEM side. Akash, you've been very clear about what's happening on the Apple side of things, but recently, you've seen Samsung launch a couple of models with its own processor. I just wondered, how do you compare and contrast that against the x85 that you guys are rightly excited about going forward? Do you think you will maintain the 100% share on the Galaxy S generation, or is that decision not quite made yet? Any color on that would be helpful.
Our next question comes from the line of Russ Seymour with Deutsche Bank, please just use your questions.
I think you will maintain the 100% share on the Galaxy S generation or is that decision not quite made, yet any color on. That would be helpful.
Akash Palkhiwala: Hey, Ross. Thanks for the question. We have been talking about the framework of our relationship with Samsung, and we have been executing a multi-year, multi-generation agreement with Samsung. And we have defined the new baseline of our share in the order of 75%. Anything above that is subsided. So that's our planning assumption. And when we outperform, I think we end up, you started to see what you saw in Galaxy S25. Competing against the Samsung own platform is nothing new for QUALCOMM. We've been doing that for decades. But I think historically, we have seen our relationship with Samsung continue to move up to the highest level of share, and that's the baseline assumption. 75% is the baseline. That's the contractor share. Everything above that is subsided.
Hey Raj, thank you for the question. Um,
We we have been talking about the framework of a relationship with Samsung, uh and we have been uh executing multi-year multi-generation agreement with Samsung and we have defined the new Baseline of our share in the order of 75%. Anything above that subsides. So that's where planning assumption. Uh, and when we outperform I think we end up you started to see what you saw in. Galas has 25 competencies Samsung. Um, own platform is nothing new for Qualcomm. Uh, we've been doing that for decades, but I think historically, we have seen a relationship with Samsung, uh, continue to move up to higher level or share. And, uh, that's the Baseline. Assumption 75% is the Baseline. That's the contractor. Share everything about that is upside.
Speaker 5: Thank you for that color. I guess as a follow-up, and it probably would align to that also within handsets, you've talked about at least the premium tier, flagship tier of having roughly double-digit ASP or content increases going forward with all the capabilities that you're offering. Does that still hold true? Does it accelerate, decelerate with the x85? Just any update on that would be great.
Shipped here of having roughly double digit, ASP or content increases going forward with all the capabilities that you're offering. Does that still hold true? Does it accelerate decelerate with the x85 just any update on? That would be great.
Akash Palkhiwala: Yeah, so if you think about our Android business in the fiscal '25, it grew over fiscal '24 by approximately 10%. So that is higher than the target we'd set at Investor Day. And it's a reflection of the strength of our roadmap, our competitive positioning, and the fact that this is a market where the volume is moving up to higher tiers where QUALCOMM has a very strong position. The other thing I just want to highlight is we did give a metric both in mine and Cristiano's prepared remarks, is over the last two years, kind of our non-Apple revenue stream in QCT has grown annually at more than 15%. So that should give you a key benchmark as you think about how the company is positioned to grow going forward as well. And this aligns with the fiscal '29 targets we set at Investor Day.
Yeah, so if if you think about our Android business uh, in uh in the 2015, it grew over uh, fiscal 24 by approximately 10%. So that is higher than the target. We had set at investor day and it's a reflection of the strength of our road map, uh, our competitive positioning, and the fact that this is a market where the volume is moving up to higher tiers, where Qualcomm has a very strong position. Um, the other thing I just want to highlight is we did give a metric both in May and cristianos prepared. Remarks is over the last 2 years, kind of, our non-apple Revenue stream in qct has grown annually at more than 15%. So that, uh, should give you a key Benchmark. As you think about how the company's position to grow going forward as well. And this aligns with the fiscal 29 targets we set at investor day,
Operator: The next question is coming from the line of Tal Liani with Bank of America. Please receive your questions. Tal, your line is live for a question. Perhaps you're on mute.
The next question is coming from the line of tolani with Bank of America. Please just see you with your questions.
Tell your line is is the line for a question, perhaps you're on mute.
Speaker 5: Here we go. About China handsets, the proportion of China is going up. And if Samsung, you said you're working with an assumption of 75% for Samsung. So if Samsung is going to go down from 100% for the Galaxy to 75, China would further go up in percentage of QCT revenues. How do you see the China growth trends when it comes to the domestic market and international markets? What's the outlook from your perspective? And what's the risk of competition within the Chinese market? Thanks. I have just a follow-up question on margins, but I'll keep it separate.
About China. And since, um,
The proportion of China is going up. Um, and if Samsung— you said you're working with an assumption of 75% for Samsung. So, if Samsung is going to go down from 100% for the Galaxy to 75%, China would further go up in percentage of QCT revenues.
Why do you see the China growth trends when it comes to the domestic Market in the international markets, what's the Outlook from your perspective? Um and what's the risk of um uh competition uh within the Chinese market? Um thanks
I have just a follow-up question on margins but I'll keep it separate.
Akash Palkhiwala: Tal, our position in China continues to be very strong. I think the evidence of that is the agreement that we announced with Xiaomi during the quarter. This is a multi-year agreement for premium phones with increasing volumes every year. And they're going to use our chip for launches within China and globally as well. In addition, they'll also be the first OEM to launch with our next step, Snapdragon 8 Elite chip, which comes out over the next couple of months. And the relationship really has expanded over the last couple of years. We've gone from phones to automotive. They introduced smart glasses with our chips, wearables, tablets. So it's a very broad relationship, and it's just an example of relationships we have with other Chinese OEMs as well. So you should consider this as a very well-positioned, sustained business for us.
Uh tell our position in China continues to be uh very strong. I think the evidence of that is the announced agreement that we announced which xiaomi during the quarter. Uh, this is a multi-year agreement for premium phones with increasing volumes every year. And they're going to use our chip for uh launches within China and globally as well. In addition, they'll also be the first OEM to launch with our next step. Snapdragon. 8 Elite chip which comes out uh over the next couple months and the relationship really is expanded over the last couple.
Akash Palkhiwala: Within Samsung, as you can see in fiscal in 2026, they launched most of their devices with our chip, but they did launch Flip with their own. And so we're slightly below 100% share. And as we go to next year, I think our agreement, as Cristiano outlined, carries over, and we're in a very good position to maintain our scale there as well.
Cristiano Amon: So let me just then maybe add a different perspective. Tal, I'm going to agree with Akash, but I'll provide probably a comment of questions that we usually don't get.
Couple years, we've gone from phones to Automotive. Uh, they are introduced smart classes with our chips variables tablets. So, it's a very broad relationship and it's, it's just an example of, uh, relationships. We have with other Chinese oems as well. So you should, uh, you should consider this as a very well positioned uh, sustained business for us uh, within uh, within Samsung. As you can see, in fiscal in 2026, they launched most of their devices with hardship, but they did launch flip with their own and so we're slightly below 100% share. And as we go to next year, I think our agreement as Cristiano outline carries over, and we're in a very good position to maintain our scale there as well.
So let me just maybe add a different perspective. Uh,
Akash Palkhiwala: Look, we have been doing business in China for 30 years. We actually started down at 3G. And I think what we learned by doing business in China, we actually learned how to move at China's speed. And I think if you look at the position in QUALCOMM in China, they only improved over the years. And as Akash outlined, not only have we been well positioned in the phone business, we're well positioned with some of the fastest growing OEMs in the auto business. And that is expanding now into industrial, into robotics, and other areas. So another way to look into this is QUALCOMM has become a very competitive company and learned how to compete in China and have been serving well. I think the market would expect that to continue to be the case.
We we have been, we've been doing business in China for 30 years. We actually started down at the 3G and I think, what, what, what we learned by doing business in China. We actually learn how to move at China's speed and I think if you look at the position in Qualcomm in China the only improve over the years and as aasha outline not only we've been well positioned on the phone business, we're all positioned with some of the fastest growing oems in the out of business and that is expanding now into industrial into Robotics and other areas. So another way to look into this is uh Qualcomm has became a very competitive company and learn how to compete in China and uh and have been serving. Well, I think the market we expected to that to continue to be the case.
Speaker 5: Got it. Maybe just a question on margins, a quick one. I see that when I look at gross margin, operating margin, I see that there is kind of you managed to maintain a very healthy operating margin despite the fluctuations in Apple revenues. So I just want to ask you a question I'm getting from investors quite often. What are the implications of the decline in Apple? What are the implications on margins? Are they positive or negative? Thanks.
Maybe just, um, a question on margins—a quick one. Um,
I see that when I look at the gross margin operating margin, um, I see that there is uh uh,
Kind of you managed to maintain a very healthy operating margin despite the fluctuations in Apple revenues. So I I just want to ask you a question. I'm getting from investors uh quite often. What are the implications of the decline in apple? What are the implications on margins? Are they positive or negative? Thanks.
Akash Palkhiwala: Yeah, I think we're very happy with the margin profile of the business. I mean, we will be at close to 30% margin this year, which is the target we've set for the long term. As you look forward, the growth opportunity that we have in auto IoT far exceeds the scale of the Apple revenue. So I think we have the ability to continue to grow revenue and manage the margin profile as a result of it. And so no change to our long-term target margin versus what we've set in the past.
Yeah, I think we're we're very, very happy with the margin profile uh of the business. I mean, we had uh we will be at uh close to 30% margin this year, which is the target we've set for the long term. Um, as you look forward, the growth opportunity that we have in Auto iot Far exceeds the scale of the Apple Revenue. So I think, uh, we have the ability to continue to grow revenue and and uh manage the margin profile as a result of it. And so, no change to our long-term Target uh margin. Uh, versus what we've said in the past.
Operator: Thank you. Our last question comes from the line of Ben Ricey with Mellis Research. Please receive your questions.
Thank you.
Our last question comes from the line of Ben Rees with Billy's Research. Please see a few questions.
Speaker 5: Hey, guys. Thanks a lot. I appreciate it. I wanted to ask about the data center. You're buying AlphaWave for $2.4 billion. You have big ambitions there, it sounds like, for FY '28. What are your thoughts on having more of a tuck-in acquisition strategy there or even going bigger to get big fast and get a hold of customers if you have such great IP? I was just wondering if you could kind of give your a little bit more of the strategy. Is it more AlphaWave's coming, or would you ever consider a bigger acquisition?
Oh hey guys, thanks a lot. I appreciate it.
I wanted to ask about the data center, you know, you're buying Alpha wave for 2.4 billion, um,
You have a big Ambitions there. It sounds like for FY 2 8.
Doing a you know having more of a tuck in acquisition strategy there or even going bigger, you know to get big fast and and get a hold of customers. If you have such great IP I was just wondering if you kind of give your your a little bit more of the strategy is it more Alpha Waves coming or would you ever consider a bigger acquisition?
Akash Palkhiwala: Thanks. Thanks, Ben, for your question. Look, at this point, we're very focused on actually driving AlphaWave to closure and building our product roadmap. I think we feel that it provides the IP that is complementary to what we have and allows us to build a competitive position. This is a new initiative for QUALCOMM, as I outlined. And like we have done for the rest of our business, as opportunity becomes available, we're always going to be looking at how to complement the roadmap. Right now, we're really focused on driving AlphaWave to closure.
Thanks.
Thanks Ben for your question, look. Uh, at this point we're very focused on actually driving Alpha wave to closure and building, um, our product road map. I think we, we feel that, uh, it provides the IP that is uh, uh, complimentary to what we have and, and allow us to build a competitive position. Uh, this is a new Initiative for Qualcomm, as I outline and uh, like we have done for the rest of our business. Um, as opportunity becomes available, we're always going to be looking at how to compliment the road map. Right now, we're really focused on driving Alpha wave to closure.
Speaker 5: All right. Thanks. And can I just ask a quick follow-up on your comments around Gemini and Galaxy AI use in the Android area? And just can you just draw that out a little more? Obviously, there's a perception that the Apple products are a little behind in AI. And what that means for you over the long term, whether you're really optimistic about that, maybe even past your fiscal first quarter? And just any more color there? Thanks.
Akash Palkhiwala: Yes. Consistent to what we have been saying, we're starting to see AI use cases on phones to gain traction. And there's also another interesting data point. I think if you look at the overall share of AI models, you see Gemini actually increasing dramatically over other models. We have seen, I think, the advantage of the Android ecosystem in terms of the maturity of AI, as more and more use cases become agentic or you started to see AI as part of the applications. I expect that it creates excitement about the Android ecosystem, expands its SAM, and it drives upgrade cycles. Those are all positive things from a mobile business. So I will think that what AI is doing is making connectivity more relevant again, especially because of voice utilization. It's driving more computing, more capable devices, and it's actually changing the use cases.
All right. Thanks. And can I just, uh, ask a quick follow-up on your comments around Gemini and, uh, Galaxy AI use and in, in the Android, um, area and just can you just, uh, draw that out a little more, you know, obviously, there's a perception that, that the Apple products are a little behind in Ai. And, uh, what that what that means for you, over the long term, whether you're really optimistic about that, maybe even past the, uh, the, uh, your fiscal first quarter. And, and just any any bit more color there. Thanks.
Akash Palkhiwala: And the rate of utilization, it's very encouraging. What I said in the call about 3x between Galaxy S24 and Galaxy S25, and I think I expect that to continue to accelerate.
Use cases and the, um, the rate of utilization. It's very encouraging. What I said in the call about 3x between Galaxy s24 and Galaxy s25. And I think I expect that to continue to accelerate
Speaker 5: Thank you.
Operator: This concludes today's question and answer session. Mr. Amon, do you have anything further to add before adjourning the call?
Thank you.
This concludes today's question-and-answer session. Mr. Ramen, do you have anything further to add before joining the call?
Akash Palkhiwala: Thank you all for attending the call. I'd like to thank our employees, our partners, and we appreciate following QUALCOMM. We'll continue to execute on our strategy. We feel that the company is on the right trajectory, especially as we look for growth and diversification beyond handsets. And AI continues to be a great opportunity for us. Thank you very much.
Uh, thank you all for attending the call. I would like to thank of our employees, our partners. Uh, and uh, we appreciate uh, holding welcome. We'll continue to execute on our strategy. We feel that the company is on the right trajectory, especially as we look for growth and diversification Beyond handsets and uh, AI continue to be a great opportunity for us. Thank you very much.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.