Qualcomm Incorporated · NASDAQ:QCOM
Qualcomm — Q1 FY2016 Earnings Presentation
29 slides from Qualcomm's earnings presentation, Jan 27, 2016
Slide 1: First Quarter Fiscal 2016 Earnings
First Quarter Fiscal 2016 Earnings January 27, 2016
Slide 2: Safe Harbor
Safe Harbor In addition to the historical information contained herein, this presentation and the conference call that accompanies it contain forward-looking statements that are inherently subject to risks and uncertainties, including but not limited to statements regarding our expectation for impro
Slide 3: Qualcomm Reports First Quarter Fiscal 2016 Earnings
Qualcomm Reports First Quarter Fiscal 2016 Earnings Quarter ended December 27, 2015 • We delivered a stronger than expected quarter with earnings per share above the high end of our initial estimates, driven by better than expected 3G/4G reported device sales and benefits realized from cost actions
Slide 4: Strategic Realignment Plan on Track
Strategic Realignment Plan on Track SRP Initiative Update 1. Aggressively right-size cost structure • On track to achieve $1.4 billion spending reductions • Now on track to realize at least $700 million in savings in FY’16, an increase of $100 million from previous estimate 2. Review alternatives to
Slide 5: Strategic Realignment Plan on Track (cont.)
Strategic Realignment Plan on Track (cont.) SRP Initiative Update 4. Add new Directors with complementary skill sets while reducing the average • Director additions and retirements reduced average tenure to 5 years* tenure of the Board • Utilizing ROIC and relative TSR to determine performance-based
Slide 6: Aggressively Reducing Costs
Aggressively Reducing Costs $1.4 billion cost reduction plan on track (estimates as of January 27, 2016) Target On Track Reduction in spending* vs. FY’15 baseline ~$1.1B ~$7.3B QCT spend ~$800M ~$6.6B Non-QCT spend ~$300M ~$6.2B FY’16 planned reduction +$100M vs. prior est. $700M+ Timing of
Slide 7: First Quarter Fiscal 2016 Results vs. Guidance
First Quarter Fiscal 2016 Results vs. Guidance Q1’16 Q1’16 Guidance* Results Revenues(1) $5.2B – $6.0B $5.8B Non-GAAP(2) diluted EPS(3) $0.80 – $0.90 $0.97 MSMTM chip shipments 225M – 245M 242M Total reported device sales(4) (Sep. Qtr.(5)) $50.0B – $58.0B $60.6B Est. reported 3G/4G device shipments(
Slide 8: Second Quarter Fiscal 2016 Guidance
Second Quarter Fiscal 2016 Guidance As of January 27, 2016 Q2’16 Guidance Revenues(1) $4.9B - $5.7B Non-GAAP(2) combined R&D and SG&A expenses Down ~ 2 - 4% QoQ Non-GAAP(2) diluted EPS(3) $0.90 - $1.00 MSM chip shipments 175M - 195M QCT operating margin % Low to mid single-digit % QCT revenue per MS
Slide 9: Fiscal 2016 Supplemental Guidance
Fiscal 2016 Supplemental Guidance As of January 27, 2016 FY’16 Guidance Global 3G/4G device sales^ (Sep - Jun. Qtr.) Grow at a low single-digit % YoY QTL revenue range* ~ $7.3B - $8.0B QCT EBT margin At least 16% in Q4’16 QCT performance — EBT $ Improving 2nd half of FY’16 Non-GAAP(2) combined R&D a
Slide 10: MSM Chip Shipments
MSM Chip Shipments Calendar year, millions 919 903 748 270 242 616 213 203 182 236 190 141 225 225 172 141 233 175 – 152 173 188 195e* 2012 2013 2014 2015 2016 Quarter March June September December * Guidance as of Jan. 27, 2016. 10
Slide 11: Quarterly Total Reported Device Sales
Quarterly Total Reported Device Sales(4)(5) Reported by Qualcomm licensees 295+ CDMA-based licensees; 250+ licensed for WCDMA 170+ royalty-bearing single-mode OFDM/OFDMA licensees $65.0 - $75.8 $66.5 $73.0e* $61.1 $60.2 $61.6 $60.4 $60.6 $56.5 $58.1 $57.4 $56.4 $58.3 In Billions Dec’12 Mar’13 Jun’13
Slide 12: Global 3G/4G Device Shipment Estimates
Global 3G/4G Device Shipment* Estimates Calendar year, as of January 27, 2016 ~ 1.67B - ~ 1.54B - 1.77Be 1.58Be ~ 1.37B ~ +7 - 13% ~ +12 - 15% 2014 2015 2016 * Global 3G/4G device shipments represent our estimate of CDMA-based, OFDMA-based and CDMA/OFDMA multimode subscriber devices shipped globally
Slide 13: Supplemental Information, 3G/4G Device Estimates
Supplemental Information, 3G/4G Device Estimates* As of January 27, 2016 FY’15 FY’16 CY’15 CY’16 Global ~ 1.54B - 1.58B ~ 1.67B - 1.77B 3G/4G Units Reported(4)(5) ~ 1,233M – 1,249M Global ~ $181 - $191 3G/4G ASP Reported(4)(5) ~ $199 - $205 ~ Grow at a low Global ~ $271B - $280B 3G/4G single-digit %
Slide 14: Quarterly Estimated 3G/4G Reported Device Shipments and ASP Trend
Quarterly Estimated 3G/4G Reported Device Shipments and ASP Trend(4)(5) FY’14 FY’15 FY’16 Sep’13 Dec’13 Mar’14 Jun’14 Sep’14 Dec’14 Mar’15 Jun’15 Sep’15 Dec’15** $65.0 - Qtr. total reported device sales ($B) $61.6 $66.5 $58.1 $57.4 $56.4 $75.8 $60.4 $58.3 $60.6 $73.0e FY total reported device sales
Slide 15: Cumulative $49.9 Billion Returned to Stockholders
Cumulative $49.9 Billion Returned to Stockholders As of December 27, 2015 • Completed the incremental $10 billion Stock Repurchases* (Billions) buyback announced last March. $11.25 • $4.9 billion remained authorized for repurchase under our stock $4.61 $4.55 $3.02 repurchase program. $1.50 $1.48 $1.
Slide 16: Financial Strength
Financial Strength In Billions Dec’14 Dec’15 Domestic $4.1 $2.7 $27.5 $27.9 Cash resources and operating/ Offshore stock repurchase flexibility Total cash & marketable securities $31.6 $30.6 Total assets $48.4 $50.2 Stockholders’ equity $38.8 $30.2 Solid balance sheet Debt* $0.0 $11.0 EBITDA** (7) $
Slide 17: Footnotes
Footnotes 1. Throughout this presentation, revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before adjustments for noncontrolling interests), unless otherwise stated. 2. Non-GAAP results exclude the QSI (Qualcomm
Slide 18: Reconciliations
Reconciliations
Slide 19: Non-GAAP Results
Non-GAAP Results In millions, except per share data Share-Based Other Non-GAAP QSI GAAP Compensation Items(1)(2)(3) Net income (loss) $1,469 $234 ($187) ($18) $1,498 Q1: Diluted EPS $0.97 $0.15 ($0.12) ($0.01) $0.99 Fiscal 2016 Diluted shares 1,517 1,517 1,517 1,517 1,517 Net income (loss) $1,427 $8
Slide 20: Non-GAAP Results (cont.)
Non-GAAP Results (cont.) In millions, except per share data 1. In the first quarter of fiscal 2016, other items excluded from Non-GAAP EBT included $172 million of acquisition-related charges; $54 million of restructuring and restructuring-related charges and a $48 million gain on the sale of our bu
Slide 21: EBITDA
EBITDA(1) In millions Q1 FY’15 Q1 FY’16 Net income $1,971 $1,496 Plus: Income tax expense 327 214 Plus: Depreciation and amortization expense 287 364 Plus: Interest expense 1 74 Less: Interest and dividend income (134) (136) EBITDA $2,452 $2,012 (1) EBITDA is defined as net income (before adjustment
Slide 22: Q1 FY'16 Combined R&D and SG&A Expenses, sequential comparison
Q1 FY’16 Combined R&D and SG&A Expenses, sequential comparison In millions Q4’15 Q1’16 % Increased / Results Results (Decreased) Non-GAAP combined R&D and SG&A expenses $1,684 $1,648 (2%) QSI 8 10 Other Items(1) 36 35 Shared-based compensation allocated to R&D and SG&A 224 237 Total GAAP combined R&
Slide 23: Q1'16 Tax Rate Reconciliation
Q1’16 Tax Rate Reconciliation In millions Share-Based Other Non-GAAP QSI GAAP Compensation Items Income (loss) before $1,779 $359 ($247) ($181) $1,710 income taxes Q1: Income tax (expense) Fiscal 2016 (310) (127) 60 163 (214) benefit Net income (loss)(1) $1,469 $232 ($187) ($18) $1,496 Tax rate 17%
Slide 24: Free Cash Flow
Free Cash Flow(a) In millions Three Months Ended December 27, 2015 Share-Based Non-GAAP QSI Other Items (b) GAAP Compensation Net cash provided (used) by operating activities $2,823 ($2) ($2) (c) ($80) $2,739 Less: Capital expenditures (128) - - - (128) Free cash flow $2,695 ($2) ($2) ($80) $2,611 R
Slide 25: Free Cash Flow
Free Cash Flow(a) In millions Cumulative FY’15 FY’14 FY’13 FY’13 - FY’15 Net cash provided (used) by operating activities $5,506 $8,887 $8,778 $23,171 Less: Capital expenditures (994) (1,185) (1,048) (3,227) Free cash flow $4,512 $7,702 $7,730 $19,944 Cash paid to repurchase shares of our common sto
Slide 26: Business Outlook
Business Outlook As of January 27, 2016 Current Guidance Second Fiscal Quarter Q2’15 Results(1) Q2’16 Estimates Revenues $6.9B $4.9B - $5.7B Year-over-year change decrease 17% - 29% Non-GAAP diluted EPS $1.40 $0.90 - $1.00 Year-over-year change decrease 29% - 36% Diluted EPS attributable to QSI ($0.
Slide 27: Q2 FY'16 Combined R&D and SG&A Expenses Guidance
Q2 FY’16 Combined R&D and SG&A Expenses Guidance In millions Q1’16 Q2’16 Guidance* (est.) Results Non-GAAP combined R&D and SG&A expenses $1,648 Approx. decrease 2% - 4% QSI 10 Not provided Other Items(1) 35 Not provided Total combined R&D and SG&A expenses excluding certain 1,693 Approx. decrease 2
Slide 28: Fiscal 2015 Results and Fiscal 2016 Guidance
Fiscal 2015 Results and Fiscal 2016 Guidance* (est.) In millions FY’15 FY’16 Guidance* (est.) Results Non-GAAP combined R&D and SG&A expenses excluding $6,606 Approx. decrease 7% - 9% the effects of certain acquisitions(1) Certain acquisitions(1) 42 Not provided Non-GAAP combined R&D and SG&A expens
Slide 29: Thank you
Thank you Follow us on: For more information, visit us at: www.qualcomm.com & www.qualcomm.com/blog Nothing in these materials is an offer to sell any of the components or devices referenced herein. ©2016 Qualcomm Technologies, Inc. and/or its affiliated companies. All Rights Reserved. Qualcomm is a