Qualcomm Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Qualcomm Inc. reported strong Q4 and fiscal 2025 financial results, exceeding guidance, driven by robust demand for Snapdragon-powered premium tier Android handsets, record Automotive and IoT revenues, and significant advancements in AI PCs and smart glasses. The company also announced its entry into the AI inference data center market and provided optimistic fiscal Q1 2026 guidance, while reiterating its long-term revenue targets for Automotive and IoT.
Key financial results
Q4 fiscal 2025 revenues were $11.3 billion, exceeding the high end of guidance.
Non-GAAP earnings per share (EPS) for Q4 fiscal 2025 were $3, exceeding the high end of guidance.
Fiscal 2025 non-GAAP revenues were $44 billion, up 13% year-over-year.
Fiscal 2025 non-GAAP EPS was $12.03, representing 18% year-over-year growth.
Record free cash flow of $12.8 billion was generated.
Business segment results
QCT revenues in Q4 fiscal 2025 were $9.8 billion, up 9% sequentially.
QCT revenues in Q4 fiscal 2025 were driven by strong end customer demand for Snapdragon-powered premium tier Android handsets, continued traction for Automotive Snapdragon Digital Chassis, and strength in IoT across industrial Wi-Fi 7 access point, 5G fixed wireless, and smart glasses.
All three QCT revenue streams exceeded expectations in Q4 fiscal 2025, including record Automotive quarterly revenues in excess of $1 billion.
Licensing business (QTL) revenues were $1.4 billion in Q4 fiscal 2025.
Fiscal 2025 record QCT annual revenues were $38.4 billion, up 16% year-over-year.
Automotive and IoT revenue growth in fiscal 2025 were 36% and 22% year-over-year, respectively.
Total QCT non-Apple revenues grew 18% year-over-year in fiscal 2025, above prior estimates.
QTL revenues of $1.4 billion and EBT margin of 72% were above the midpoint of guidance in Q4 fiscal 2025, driven by slightly higher handset units.
QCT delivered revenues of $9.8 billion and EBT of $2.9 billion in Q4 fiscal 2025, with year-over-year growth of 13% and 17%, respectively.
QCT EBT margin of 29% was at the high end of guidance in Q4 fiscal 2025.
QCT handset revenues of $7 billion increased 14% year-over-year in Q4 fiscal 2025, reflecting increased demand for premium Android handsets powered by the Snapdragon 8 Elite Gen 5 platform.
QCT IoT revenues of $1.8 billion grew 7% year-over-year in Q4 fiscal 2025, driven by strength across industrial and networking products and increased demand for AI smart glasses.
In QCT Automotive, the company surpassed the $1 billion quarterly revenue milestone in Q4 fiscal 2025, delivering 17% year-over-year revenue growth.
In fiscal 2025, QCT achieved 16% year-over-year revenue growth driven by double-digit increases across all revenue streams, with IoT up 22% and Automotive growing 36%.
QCT operating margins of 30% were delivered in fiscal 2025, in line with the long-term target.
Over the past five years, non-Apple QCT revenues grew at a 15% compounded annual growth rate.
Over the last two years, non-Apple QCT revenues grew by 17% and 18%, respectively.
Capital allocation
The company returned nearly 100% of free cash flow to stockholders through repurchases and dividends through the year.
Industry trends and dynamics
The premium tier handset market is expanding and adding more compute.
The intelligent wearables category, specifically smart glasses, is evolving into personal AI devices and is growing at a remarkable pace, reaching an inflection point fueled by strong demand from Meta.
AI data center growth is moving from training to dedicated inference workloads, a trend expected to accelerate in the coming years.
The mass adoption and continuous use of AI applications is driving the industry to look for competitive alternatives that prioritize power-efficient performance and cost.
Competitive landscape
The Snapdragon X2 Elite and X2 Elite Extreme platforms for premium laptops continue to outperform Intel and AMD in both speed and power efficiency.
The latest NPU sets a new benchmark as the world's fastest AI engine for laptops, exceeding Intel and AMD in performance.
The new Oryon Gen 3 is the world's first 5-gigahertz CPU for the ultra-mobile laptop category with extended battery life.
The company believes it is one of the best positioned companies to lead the expansion of AI to the edge, edge-to-cloud hybrid AI, and develop a power-efficient cloud inferencing solution.
The market wants competition for data center solutions.
Discussions with Huawei for a license are still underway.
Growth opportunities and strategies
The company remains on track to achieve its fiscal 2029 long-term revenue commitment as outlined at its 2024 Investor Day.
Introduced the Snapdragon 8 Elite Gen 5 mobile platform for next-generation flagship AI smartphones.
Unveiled new platforms for premium laptops, the Snapdragon X2 Elite and X2 Elite Extreme.
Expects approximately 150 designs for Snapdragon-powered AI PCs to be commercialized through 2026.
Leadership in smart glasses is reflected by 30 designs in production or development with global partners, including Meta and Samsung.
Achieved a significant milestone in Automotive with the launch of Snapdragon Ride Pilot, a full-system solution for L2+ automated driving, developed in close collaboration with BMW.
Snapdragon Ride Pilot is currently validated in 60 countries and extends to 100 in 2026.
Expanded partnership with Google to integrate Google Gemini models into Snapdragon Digital Chassis solutions for personalized in-vehicle AI agents.
Completed the acquisition of Arduino, an open-source hardware and software company, to accelerate plans for a comprehensive edge AI development platform.
Released the Arduino UNO Q single board computer, powered by a Dragonwing processor, for full-stack edge AI applications.
Announced entry into the AI inference data center market with and SoCs and associated accelerator cards and racks.
HUMAIN is the first customer for these data center solutions, with a target deployment of 200-megawatts starting in 2026.
The company is executing on a multi-generation roadmap with an annual cadence for data center products.
An update will be provided in the first half of 2026 on data center plans, including roadmap, performance, and differentiated memory and compute technology.
Progress will also be highlighted in advanced robotics, next-generation ADAS, industrial edge AI, and 6G devices and AI-powered RAN.
Data center products are now expected to start leading to a revenue ramp beginning in fiscal 2027, pulling forward from fiscal 2028.
The data center opportunity could be a potential multi-billion-dollar revenue opportunity in a couple of years.
The XR market, especially AI smart glasses, is taking off very fast, creating significant upside opportunity.
Financial Guidance and Outlook
For the first fiscal quarter (Q1 2026), revenues are expected in the range of $11.8 billion to $12.6 billion.
Non-GAAP EPS for Q1 fiscal 2026 is expected to be $3.30 to $3.50.
In QTL, Q1 fiscal 2026 revenues are estimated at $1.4 billion to $1.6 billion, with EBT margins of 74% to 78%.
In QCT, Q1 fiscal 2026 revenues are expected to be $10.3 billion to $10.9 billion, with EBT margins of 30% to 32%.
Record QCT handset revenues are anticipated in Q1 fiscal 2026, with low-teens percentage growth sequentially, primarily driven by new flagship Android handset launches.
QCT IoT revenues are expected to see a sequential decline in Q1 fiscal 2026, consistent with last year's seasonality in consumer products.
QCT Automotive revenues in Q1 fiscal 2026 are estimated to remain flat to slightly up on a sequential basis, following a record Q4.
Non-GAAP operating expenses are forecast to be approximately $2.45 billion in Q1 fiscal 2026.
The non-GAAP tax rate is expected to remain in the 13% to 14% range going forward due to new legislation, anticipating lower cash tax payments.
A non-cash charge of $5.7 billion was incurred in Q4 fiscal 2025 to reduce the value of deferred tax assets, which is excluded from non-GAAP metrics.
The company is on track to achieve its $8 billion Automotive revenue target and $14 billion IoT revenue target for fiscal 2029.
The Alphawave acquisition is expected to close in the first calendar quarter of 2026.
