Qualcomm Incorporated · NASDAQ:QCOM
Qualcomm — Investor Day (November 2019)
23 slides from Qualcomm's investor day presentation, Nov 19, 2019
Slide 1: Akash Palkhiwala, EVP and CFO
Akash Palkhiwala EVP and CFO, Qualcomm Incorporated
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 business, product, t
Slide 3: Maximizing stockholder value
Maximizing stockholder value Revenue growth Margin expansion Capital allocation Mobile handset platform Operating margin expansion Focused R&D investments Adjacent platforms Technology leverage Capital return Licensing Operating discipline Opportunistic M&A
Slide 4: Drivers of revenue growth
Drivers of Mobile handset platform Adjacent platforms Long-term opportunities Licensing revenue growth Core chipsets (4G 5G) RF Front-End Fingerprint Automotive Compute IoT ADAS Cloud/Edge AI Handset trends 5G benefit $11.3B $3.4B $4.6B FY19 revenues FY19 revenues FY19 QTL revenues Sums may not to
Slide 5: 5G adoption
4G handset ramp 5G handsets Units in millions >750 ~0.9B ~1.3B 4G handsets 89% 3G handsets >$400 28% Mobile handsets 47% >450 5G adoption $250–$400 21% $100–$250 175–225 9% <$100 Year 2* of 4G ramp Year 4 CY19e CY20e CY21e CY22e Forecast based on mature 5G adoption faster than 4G due to timing hands
Slide 6: Core chipsets
SAM SAM expansion driven by 5G complexity, expected to drive By 3G/4G and 5G content growth Mature handset industry with transition to 5G Mobile handset platform $35B ~10% Core chipsets 5G will propagate across price tiers at rapid pace CAGR $26B 230+ strong design win pipeline across all devices 5G
Slide 7: RF Front-End
SAM Growth driven by higher RFFE complexity (5G Sub-6 and mmWave) By 3G/4G and 5G Dynamic Spectrum Sharing expected to drive shift of RFFE content from 4G to 5G Mobile handset platform $18B ~12% RF Front-End CAGR Competitive differentiation with modem-to-antenna system solutions 5G $13B 5G RFFE cont
Slide 8: Core chipsets + RF Front-End
Mobile handset platform Core chipsets Applications processor Up to 1.5x Modem + Transceiver + RF Front-End 4G 5G revenue growth Growth includes core chipsets Power management Filters + Power amplifiers and RF Front-End content Envelope tracker 4G Qualcomm® 5G Qualcomm® Like-for-like chipsets Snapd
Slide 9: Adjacent platforms
Compute 3-yr SAM CY22e SAM CAGR Adjacent IoT: Auto Non-cellular Automotive $4B 12% FY19 Compute1 $8B 2% platforms IoT: Cellular revenues IoT $13B 10% Total ~$25B 8% Addressing large SAMs with diversified revenues across products and industries Increasing demand for mobile technologies and 5G in adja
Slide 10: Automotive
SAM Design win pipeline 3 Revenue growth Telematics/Connectivity1 + Infotainment2 Future revenues for designs won $4B ~$1.5B Adjacent platforms $2B+ Automotive $3B January 2018 $6.5B Today >$0.6B 75% Design wins to-date CY19e CY22e FY19 FY22e FY24e High technology and product Design win pipeline pro
Slide 11: IoT
Networking Robotics Tracking Wearables Cameras 3-yr CY22e SAM SAM CAGR Industrial Home Adjacent platforms handheld >11,000 automation IoT: Cellular $4B 18% IoT Voice and music customers Consumer electronics IoT: Non-cellular $9B 7% Mobile XR/VR Total IoT ~$13B 10% broadband Utilities Retail Broad, d
Slide 12: Long-term growth opportunities
Connectivity Long-term Modem RFFE Wi-Fi AP/Multimedia growth Camera AI Video Graphics Security Location/ ADAS Cloud/Edge AI GNSS $5B SAM1 $13B SAM2 opportunities Power mgmt. Display Audio codec Leveraging mobile technology and scale into new growth opportunities Approximately $200M current annual in
Slide 13: QTL
75+ 5G license agreements to-date $4.6B Multi-year anchor agreements signed QTL $1.3–$1.5B revenues in 1Q FY20e $1.0–$1.2B revenues in 2Q FY20e 1H FY20 Well positioned for future $2.3–$2.7B Upside to financial guidance: Huawei resolution 5G benefit FY19 FY20e Revenues
Slide 14: Investments and operating leverage
Focus on operating leverage and margin Investments $7.4B $6.4B * $6.6B expansion and operating Concluded Cost Reduction Plan1 Q4’17 Q2’19 Run-rate $0.5B savings from divesting non-core Annualized run-rate Annualized run-rate exiting FY19 businesses2 leverage Reduced Non-GAAP SG&A3 by 22% ~$1B FY20e:
Slide 15: Capital structure
Capital allocation Capital structure Cumulative 3 years Grow capital returns and maintain strategic flexibility (FY17–FY19) Capital $17 Billion Strong balance sheet and investment grade rating structure R&D $26 Billion Plan to grow dividends over time Stock repurchases Anti-dilutive buybacks as base
Slide 16: Acquisitions and priorities
Successful integration track record RF Front-End acquisitions Cumulative 5 years (FY15–FY19) Acquisitions 14 5 2 and priorities <$50M $50–$500M >$500M Priorities Connectivity acquisitions Technology focus and valuation discipline Aligned with existing strategy Tuck-in acquisitions—extension of R&D p
Slide 17: 3-year targets
QCT SAM: 10% CAGR* Revenue growth QCT: Grow faster than SAM and Apple product revenues QTL: Current run-rate + Huawei resolution 3-year targets Operating margin QCT: Grows to >20% Earnings mix shift from QTL to QCT QTL: Approximately 70% FY20–FY22 14% tax rate Other items Current weighted average di
Slide 18: Key takeaways
Summarizing Qualcomm opportunities Mature handset industry and current macroeconomic environment Accelerated 5G migration compared to 4G Mobile handset platform: 4G5G transition, RF Front-End growth Key takeaways Growth beyond mobile: Auto, IoT, Compute, ADAS, Cloud/Edge AI 75+ 5G licenses includin
Slide 19: 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. Nothing in the videos References in this presentation to “Qualcomm” may mean Qualcomm Incorporated, Q
Slide 20: Reconciliations
Reconciliations
Slide 21: Note regarding use of Non-GAAP financial measures
Note regarding use of Non-GAAP financial measures Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items, tax items and other items. Other items excluded from Non-GAAP results include third-party acquisition and integ
Slide 22: SG&A expenses
SG&A expenses In millions FY2017 Baseline Spend(1) FY2019 Results % change Non-GAAP SG&A expenses $2,396 $1,878 (22%) Plus amounts attributable to QSI 16 13 -% Plus amounts attributable to share-based compensation 248 277 4% Plus amounts attributable to other items(2) 308 27 (8%) GAAP SG&A expenses
Slide 23: Combined R&D and SG&A expenses
Combined R&D and SG&A expenses In millions FY2017 Baseline Spend(1) Q2 FY2019 Exit Spend(2) FY2019 Exit Spend(3) Non-GAAP combined R&D and SG&A expenses excluding elevated litigation costs(4) $7,440 $6,444 Not provided Elevated litigation costs - 180 Not provided Non-GAAP combined R&D and SG&A expen