QUALCOMM INCDE

Previous wording

Revenues for the second quarter of fiscal 2024 were $9.4 billion, an increase of 1% compared to the year ago quarter, with net income of $2.3 billion, an increase of 37% compared to the year ago quarter. Key items from the second quarter of fiscal 2024 included:

Current wording

Revenues for the third quarter of fiscal 2024 were $9.4 billion, an increase of 11% compared to the year ago quarter, with net income of $2.1 billion, an increase of 18% compared to the year ago quarter. Key items from the third quarter of fiscal 2024 included:

Previous wording

•QCT revenues increased by 1% in the second quarter of fiscal 2024 compared to the year ago quarter, due to higher automotive and handsets revenues, partially offset by lower IoT revenues.

Current wording

•QCT revenues increased by 12% in the third quarter of fiscal 2024 compared to the year ago quarter, due to higher handsets and automotive revenues, partially offset by lower IoT revenues.

Previous wording

•QTL revenues increased by 2% in the second quarter of fiscal 2024 compared to the year ago quarter, due to an increase in estimated sales of 3G/4G/5G-based multimode products.

Current wording

•QTL revenues increased by 3% in the third quarter of fiscal 2024 compared to the year ago quarter, due to an increase in estimated sales of 3G/4G/5G-based multimode products.

Previous wording

The increase in revenues in the second quarter of fiscal 2024 was primarily due to $98 million in higher equipment and services revenues from our QCT segment.

Current wording

The increase in revenues in the third quarter of fiscal 2024 was primarily due to $880 million in higher equipment and services revenues from our QCT segment.

Previous wording

The increase in revenues in the first six months of fiscal 2024 was primarily due to $624 million in higher equipment and services revenues from our QCT segment.

Current wording

The increase in revenues in the first nine months of fiscal 2024 was primarily due to $1.5 billion in higher equipment and services revenues from our QCT segment.

Previous wording

Gross margin percentage increased in the second quarter of fiscal 2024 primarily due to an increase in QCT gross margin.

Current wording

Gross margin percentage increased in the third quarter of fiscal 2024 primarily due to an increase in QCT gross margin.

Previous wording

The decrease in research and development expenses in the first six months of fiscal 2024 was primarily due to:

Current wording

The decrease in research and development expenses in the first nine months of fiscal 2024 was primarily due to:

Previous wording

$38 million decrease driven by lower costs related to the development of wireless and integrated circuit technologies (including 5G and application processor technologies). This was primarily driven by a decrease in employee-related costs as a result of certain restructuring actions initiated in fiscal 2023 (which were substantially completed by the first quarter of fiscal 2024) to fund continued investments in key growth and diversification opportunities, partially offset by higher employee cash incentive program costs.

Current wording

-$174 million decrease driven by lower costs related to the development of wireless and integrated circuit technologies (including 5G and application processor technologies). This was primarily driven by a decrease in employee-related costs as a result of certain restructuring actions initiated in fiscal 2023 (which were substantially completed by the first quarter of fiscal 2024) to fund continued investments in key growth and diversification opportunities, partially offset by higher employee cash incentive program costs.

Previous wording

The increase in selling, general and administrative expenses in the second quarter of fiscal 2024 included:

Current wording

The increase in selling, general and administrative expenses in the third quarter of fiscal 2024 was primarily due to an increase in sales and marketing expenses.

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The increase in selling, general and administrative expenses in the first six months of fiscal 2024 included:

Current wording

The increase in selling, general and administrative expenses in the first nine months of fiscal 2024 was primarily due to:

Previous wording

+$15 million increase in sales and marketing expenses

Current wording

+$34 million increase in sales and marketing expenses

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+$21 million increase in litigation costs

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+$29 million increase in litigation costs

Previous wording

Second quarter and first six months 2024 vs. 2023

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Third quarter and first nine months 2024 vs. 2023

Previous wording

Other income and expenses in the second quarter of fiscal 2023 and the first six months of fiscal 2024 and 2023 included certain restructuring amounts (primarily related to accrued severance costs) from cost reduction actions initiated in fiscal 2023.

Current wording

Other expenses in the first nine months of fiscal 2023 included certain restructuring amounts (substantially all of which related to accrued severance costs) from cost reduction actions initiated in fiscal 2023.

Previous wording

The increase in interest and dividend income in the second quarter and first six months of fiscal 2024 was primarily due to higher interest rates earned on higher balances of interest-bearing securities.

Current wording

The increase in interest and dividend income in the third quarter and first nine months of fiscal 2024 was primarily due to higher interest rates earned on higher balances of interest-bearing securities.

Previous wording

Net gains on other investments in the second quarter and first six months of fiscal 2024 was primarily driven by certain of our QSI non-marketable equity investments.

Current wording

Net gains on other investments in the first nine months of fiscal 2024 was primarily driven by certain of our QSI non-marketable equity investments.

Previous wording

We estimate our annual effective income tax rate to be 7% for fiscal 2024, which is lower than the U.S. federal statutory rate. Our estimated annual, second quarter and first six months of fiscal 2024 effective tax rates reflect the additional benefit from FDII deductions related to certain changes made in the second half of fiscal 2023 related to income attribution and sourcing of research and development expenditures. Additional information regarding our annual effective income tax rate and income tax expense is provided in this Quarterly Report in “Notes to Condensed Consolidated Statements, Note 3. Income Taxes.”

Current wording

For the third quarter of fiscal 2024, we estimated our annual effective income tax rate to be 7% for fiscal 2024, which is lower than the U.S. federal statutory rate, and excluded the effects of an intra-group transfer of intellectual property to better align certain intellectual property ownership within our QCT business that is expected to be completed in the fourth quarter of fiscal 2024. While we continue to assess the accounting impact of the transfer, we currently expect that such transfer will result in the recognition of a tax benefit of approximately $400 million during the fourth quarter of fiscal 2024 from the establishment of a deferred tax asset. Additional information regarding our annual effective income tax rate and income tax expense is provided in this Quarterly Report in “Notes to Condensed Consolidated Statements, Note 3. Income Taxes.”

Previous wording

Discontinued operations in the second quarter and first six months of fiscal 2024 and 2023 related to the Non-Arriver businesses. Information regarding the Non-Arriver businesses is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items - Discontinued Operations.”

Current wording

Discontinued operations in the third quarter and first nine months of fiscal 2024 and 2023 are related to the Non-Arriver businesses. Information regarding the Non-Arriver businesses is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items - Discontinued Operations.”

Previous wording

The following should be read in conjunction with our financial results for the second quarter of fiscal 2024 for each reportable segment included in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 6. Segment Information.”

Current wording

The following should be read in conjunction with our financial results for the third quarter of fiscal 2024 for each reportable segment included in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 6. Segment Information.”

Previous wording

Substantially all of QCT’s revenues consist of equipment and services revenues, which were $7.9 billion and $7.8 billion in the second quarter of fiscal 2024 and 2023, respectively, and $16.2 billion and $15.5 billion in the first six months of fiscal 2024 and 2023, respectively. QCT handsets, automotive and IoT revenues mostly relate to sales of our Snapdragon platforms (which include processors and modems), stand-alone Mobile Data Modems, radio frequency transceiver, power management and wireless connectivity integrated chipsets as well as sales of 4G, 5G sub 6 and 5G millimeter wave RFFE products.

Current wording

Substantially all of QCT’s revenues consist of equipment and services revenues, which were $7.9 billion and $7.1 billion in the third quarter of fiscal 2024 and 2023, respectively, and $24.1 billion and $22.6 billion in the first nine months of fiscal 2024 and 2023, respectively. QCT handsets, automotive and IoT revenues mostly relate to sales of our Snapdragon platforms (which include processors and modems), stand-alone Mobile Data Modems, radio frequency transceiver, power management and wireless connectivity integrated chipsets as well as sales of 4G, 5G sub 6 and 5G millimeter wave RFFE products.

Previous wording

+higher handsets revenues, due to $384 million in higher revenues per chipset driven by favorable mix, partially offset by $328 million in lower chipset shipments driven by certain major OEMs

Current wording

+higher handsets revenues, due to $443 million in higher chipset shipments driven by certain major OEMs (primarily driven by the normalization of customer inventory levels, which were elevated in the prior year) and $159 million in higher revenues per chipset driven by favorable mix toward higher-tier Snapdragon platforms

Previous wording

+higher automotive revenues, primarily driven by an increase in demand for digital cockpit and connectivity products

Current wording

+higher automotive revenues, primarily driven by an increase in demand from new vehicle launches with our Snapdragon digital cockpit products

Previous wording

+higher handsets revenues, due to $549 million in higher revenues per chipset primarily driven by favorable mix and an increase in average selling prices, and $449 million in higher chipset shipments driven by certain major OEMs (primarily driven by the normalization of customer inventory levels, which were elevated in the prior year)

Current wording

+higher handsets revenues, due to $885 million in higher chipset shipments driven by certain major OEMs (primarily driven by the normalization of customer inventory levels, which were elevated in the prior year) and $741 million in higher revenues per chipset primarily driven by favorable mix toward higher-tier Snapdragon platforms

Previous wording

+higher automotive revenues, primarily driven by an increase in demand for digital cockpit and connectivity products

Current wording

+higher automotive revenues, primarily driven by an increase in demand from new vehicle launches with our Snapdragon digital cockpit products

Previous wording

-lower IoT revenues, due to $411 million in lower revenues per unit primarily driven by unfavorable mix and $279 million decrease in demand (primarily in edge networking products)

Current wording

-lower IoT revenues, due to $616 million in lower revenues per unit primarily driven by unfavorable mix and $200 million decrease in demand (primarily in edge networking products as customers continue drawing down on their elevated inventory levels, partially offset by consumer products)

Previous wording

The increase in QTL licensing revenues in the second quarter of fiscal 2024 was primarily due to an increase in estimated sales of 3G/4G/5G-based multimode products.

Current wording

The increase in QTL licensing revenues in the third quarter of fiscal 2024 was primarily due to an increase in estimated sales of 3G/4G/5G-based multimode products.

Previous wording

QTL EBT as a percentage of revenues increased in the second quarter of fiscal 2024 primarily due to lower cost of sales driven by a decrease in amortization expense related to acquired patents.

Current wording

+lower cost of sales driven by a decrease in amortization expense related to acquired patents

Previous wording

The decrease in QTL licensing revenues in the first six months of fiscal 2024 was primarily due to:

Current wording

The increase in QTL licensing revenues in the first nine months of fiscal 2024 was primarily due to:

Previous wording

-$75 million decrease in estimated revenues per unit

Current wording

-$115 million decrease in estimated revenues per unit

Previous wording

QTL EBT as a percentage of revenues increased in the first six months of fiscal 2024 primarily due to lower cost of sales driven by a decrease in amortization expense related to acquired patents.

Current wording

QTL EBT as a percentage of revenues increased in the first nine months of fiscal 2024 primarily due to lower cost of sales driven by a decrease in amortization expense related to acquired patents.

Previous wording

QSI EBT increased in the second quarter and first six months of fiscal 2024 primarily due to net gains on certain of our non-marketable equity investments.

Current wording

QSI EBT increased in the first nine months of fiscal 2024 primarily due to net gains on certain of our non-marketable equity investments.

Previous wording

•We expect certain IoT customers will continue to draw down on their inventory (which remains at elevated levels), which will continue to have a negative impact on our revenues, results of operations and cash flows.

Current wording

•We expect certain IoT customers (primarily in edge networking) will continue to draw down on their inventory (which remains at elevated levels), which will continue to have a negative impact on our revenues, results of operations and cash flows.

Previous wording

•We expect continued intense competition, including from vertical integration by certain of our customers (for example, Samsung and Huawei).

Current wording

•We expect continued intense competition, including from vertical integration by certain of our customers.

Previous wording

We have recently extended, renewed or entered into license agreements with several key OEMs. We are currently pursuing negotiations with other key OEMs whose agreements expire in early fiscal 2025 (including Huawei). We also continue to engage in negotiations toward a comprehensive resolution with a growing, China-headquartered OEM that sells primarily in developing regions. See “Risk Factors” in this Quarterly Report, including the Risk Factor titled “The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring.”

Current wording

We have recently extended, renewed or entered into license agreements with several key OEMs. We are currently pursuing negotiations with other key OEMs whose agreements expire in early fiscal 2025 (including Huawei). In addition, we have recently entered into a license agreement with Shenzhen Transsion Holdings Limited (a growing, China-headquartered OEM that sells primarily in developing regions) for its 5G products. While we continue to engage in negotiations toward a comprehensive resolution, we have initiated litigation against Transsion in multiple jurisdictions to enforce our intellectual property rights against certain of its unlicensed products. See “Risk Factors” in this Quarterly Report, including the Risk Factors titled “The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring” and“The enforcement and protection of our intellectual property may be expensive, could fail to prevent misappropriation or unauthorized use of our intellectual property, could result in the loss of our ability to enforce one or more patents, and could be adversely affected by changes in patent laws, by laws in certain foreign jurisdictions that may not effectively protect our intellectual property and by ineffective enforcement of laws in such jurisdictions.”

Previous wording

Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations and cash provided by our debt programs. The following tables present selected financial information related to our liquidity at March 24, 2024 and September 24, 2023 and for the first six months of fiscal 2024 and 2023 (in millions):

Current wording

Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations and cash provided by our debt programs. The following tables present selected financial information related to our liquidity at June 23, 2024 and September 24, 2023 and for the first nine months of fiscal 2024 and 2023 (in millions):

Previous wording

(2) Includes our issued debt reported as long-term and $914 million reported as short-term debt (which matures in May 2024). As of March 24, 2024 and September 24, 2023, our credit facility was undrawn, and we had no commercial paper outstanding.

Current wording

(2) Includes our issued debt reported as long-term and short-term. We had $1.4 billion (which matures in May 2025) and $914 million (which matured in May 2024) reported as short-term debt at June 23, 2024 and September 24, 2023, respectively. As of June 23, 2024 and September 24, 2023, our credit facility was undrawn, and we had no commercial paper outstanding.

Previous wording

Cash, cash equivalents and marketable securities. The net increase in cash, cash equivalents and marketable securities for the first six months of fiscal 2024 was primarily due to net cash provided by operating activities, partially offset by $1.8 billion in cash dividends paid, $1.5 billion in payments to repurchase 11 million shares of our common stock, $515 million in payments of tax withholdings related to the vesting of share-based awards and $398 million in capital expenditures.

Current wording

Cash, cash equivalents and marketable securities. The net increase in cash, cash equivalents and marketable securities for the first nine months of fiscal 2024 was primarily due to net cash provided by operating activities, partially offset by $2.8 billion in payments to repurchase 18 million shares of our common stock, $2.7 billion in cash dividends paid, $914 million in repayment of fixed-rate notes that matured in May 2024, $797 million in payments of tax withholdings related to the vesting of share-based awards and $785 million in capital expenditures.

Previous wording

During the first six months of fiscal 2024, income taxes paid were in excess of our provision, negatively impacting net cash provided by operating activities. This was driven primarily by our payment of $1.0 billion related to certain previously postponed U.S. federal income tax-payments from fiscal 2023, the adverse impact of the requirement to capitalize and amortize research and development expenditures for federal income tax purposes and an installment payment for a one-time U.S. repatriation tax accrued in fiscal 2018 of $414 million.

Current wording

During the first nine months of fiscal 2024, income taxes paid were in excess of our provision, negatively impacting net cash provided by operating activities. This was primarily driven by the adverse impact of the requirement to capitalize and amortize research and development expenditures for federal income tax purposes, our payment of $1.0 billion related to certain previously postponed U.S. federal income tax-payments from fiscal 2023 and an installment payment for a one-time U.S. repatriation tax accrued in fiscal 2018 of $414 million.

Previous wording

Net changes in our operating assets and liabilities for the first six months of fiscal 2024 positively impacted our operating cash flows primarily from an increase in accrued customer incentives, which included the impact of timing of related payments, a decrease in inventory as we sold a portion of our elevated inventory and an increase in accounts payable due to timing and amount of inventory purchases. This was partially offset by approximately $360 million in severance payments related to restructuring actions initiated in fiscal 2023.

Current wording

Net changes in our operating assets and liabilities for the first nine months of fiscal 2024 positively impacted our operating cash flows primarily from an increase in accounts payable due to timing and amount of inventory purchases, an increase in accrued customer incentives, which included the impact of timing of related payments, and a decrease in inventory as we sold a portion of our elevated inventory. This was partially offset by approximately $385 million in severance payments related to restructuring actions initiated in fiscal 2023.

Previous wording

On March 5, 2024, we announced an increase in our quarterly dividend per share of common stock from $0.80 to $0.85, which is effective for dividends payable after March 21, 2024. We currently intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability and our view that cash dividends are in the best interests of our stockholders, among other factors. Additional information regarding our capital returns is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 4. Capital Stock.”

Current wording

Capital Return Program. Our stock repurchase program is subject to periodic evaluations to determine when and if repurchases are in the best interests of our stockholders, and we may accelerate, suspend, delay or discontinue repurchases at any time. We currently intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability and our view that cash dividends are in the best interests of our stockholders, among other factors. Additional information regarding our capital returns is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 4. Capital Stock.”