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Qualcomm Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 29 July 2026: press release. Guidance figures: 9 new. The quarter’s numbers.

Key takeaways

  • Revenue fell 4% to $9.9 billion: Revenues were $9,947 million, down 4% from $10,365 million a year earlier. GAAP and non-GAAP revenues were the same, as no items were excluded from revenue. Source
  • Automotive and IoT grew 28%: Combined QCT Automotive and IoT revenues grew 28% year over year, as stated in the release headline. Source
  • QCT revenue down 5% on handsets: QCT revenues were $8,504 million, down 5%, with QCT EBT of $2,192 million, down 18%. Handsets revenue fell 20% to $5,086 million; Automotive rose 61% to $1,588 million and IoT rose 9% to $1,830 million. Source
  • Input costs rising across industry: Management said the semiconductor industry is seeing a broad-based increase in input costs across wafer fabrication, assembly, test, advanced packaging, memory and materials. These factors are reflected in both the third-quarter results and the fourth-quarter guidance. Source
  • Pricing actions to offset input costs: Management said it is taking concrete actions to reflect higher input costs in product pricing, expecting a gross margin benefit over time as pricing changes gradually take effect. Source
  • Q4 revenue guided at $9.7B-$10.5B: For the fourth quarter of fiscal 2026, the company guided revenues of $9.7 billion to $10.5 billion, with QCT revenues of $8.4 billion to $9.0 billion and QTL revenues of $1.2 billion to $1.4 billion. Source
  • Modular acquisition completed: The company completed its acquisition of Modular Inc, which the release describes as creating an open software foundation for generative and agentic AI. Source
  • $2.3B returned in the quarter: In the third quarter the company returned $2.3 billion to stockholders, including $973 million, or $0.92 per share, in cash dividends and $1.4 billion for 8 million shares repurchased. Source

“Despite a challenging memory and supply environment, our third quarter results reflect solid execution of our growth strategy, with quarterly revenues at the high end of guidance,”

Cristiano Amon, President and CEO of Qualcomm Incorporated

Guidance

AreaPeriodFigureAgainst last quarter
Revenues SourceFourth quarter of fiscal 2026$9.7B - $10.5BNew
QCT revenues SourceFourth quarter of fiscal 2026$8.4B - $9.0BNew
QTL revenues SourceFourth quarter of fiscal 2026$1.2B - $1.4BNew
GAAP diluted EPS SourceFourth quarter of fiscal 2026$1.22 - $1.42New
Share-based compensation, diluted EPS adjustment SourceFourth quarter of fiscal 2026($0.72)New
Other items, diluted EPS adjustment SourceFourth quarter of fiscal 2026($0.11)New
Non-GAAP diluted EPS SourceFourth quarter of fiscal 2026$2.05 - $2.25New
Year-over-year growth in non-handset revenues, including Data Center SourceFiscal 2027greater than 60%New
Total non-handset revenues SourceFiscal 2029$40 billionNew

What changed from last quarter

  • New guidance: Fourth-quarter fiscal 2026 guidance is presented in this release; the prior release gave third-quarter estimates. Source
  • New: The company completed its acquisition of Modular Inc. Source
  • New guidance: Fiscal 2027 target for year-over-year growth in non-handset revenues, including Data Center, from 24% in fiscal 2026. Source
  • New: Investor Day vision includes total non-handset revenues of $40 billion by fiscal 2029. Source
  • New: Pricing actions to reflect higher input costs in product pricing, with gross margin benefit expected over time. Source

Results and growth drivers

  • Revenue fell 4% to $9.9 billion: Revenues were $9,947 million, down 4% from $10,365 million a year earlier. GAAP and non-GAAP revenues were the same, as no items were excluded from revenue. Source
  • GAAP EPS $1.87, non-GAAP $2.21: GAAP diluted EPS was $1.87, down 23% from $2.43. Non-GAAP diluted EPS was $2.21, down 20% from $2.77. GAAP net income was $2,002 million, down 25%. Source
  • Automotive and IoT grew 28%: Combined QCT Automotive and IoT revenues grew 28% year over year, as stated in the release headline. Source
  • Nine-month revenue slightly lower: Nine-month revenues were $32,798 million, against $33,013 million a year earlier. Cost of revenues was $4,670 million for the quarter, against $4,606 million. Source

Segments and revenue streams

  • QCT revenue down 5% on handsets: QCT revenues were $8,504 million, down 5%, with QCT EBT of $2,192 million, down 18%. Handsets revenue fell 20% to $5,086 million; Automotive rose 61% to $1,588 million and IoT rose 9% to $1,830 million. Source
  • QCT margin fell to 26%: QCT EBT was 26% of revenues, down from 30% a year earlier. QTL EBT was 69% of revenues, down from 71%. Source
  • QTL revenue down 3%: QTL revenues were $1,278 million, down 3%, and QTL EBT was $881 million, down 6%. Source
  • Licensing revenue flat year over year: The income statement shows licensing revenue of $1,472 million, the same as a year earlier, and equipment and services revenue of $8,475 million, against $8,893 million. Source

“We are well positioned to execute on the vision we outlined at our recent Investor Day”

Cristiano Amon, President and CEO of Qualcomm Incorporated

Costs, margins and input pricing

  • Input costs rising across industry: Management said the semiconductor industry is seeing a broad-based increase in input costs across wafer fabrication, assembly, test, advanced packaging, memory and materials. These factors are reflected in both the third-quarter results and the fourth-quarter guidance. Source
  • Pricing actions to offset input costs: Management said it is taking concrete actions to reflect higher input costs in product pricing, expecting a gross margin benefit over time as pricing changes gradually take effect. Source
  • R&D and SG&A expenses rose: Research and development expense rose to $2,607 million from $2,226 million, and selling, general and administrative expense rose to $976 million from $771 million. Source
  • GAAP operating income $1,626 million: GAAP operating income was $1,626 million and non-GAAP operating income was $2,776 million. Non-GAAP results excluded $827 million of share-based compensation and $320 million of other items. Source
  • Other excluded items detailed: Other excluded items included $101 million of acquisition-related charges, $70 million of restructuring and restructuring-related charges, and $1 million of interest on a 2019 European Commission fine. Source

Demand and fourth-quarter guidance

  • Q4 revenue guided at $9.7B-$10.5B: For the fourth quarter of fiscal 2026, the company guided revenues of $9.7 billion to $10.5 billion, with QCT revenues of $8.4 billion to $9.0 billion and QTL revenues of $1.2 billion to $1.4 billion. Source
  • Q4 GAAP EPS guided $1.22-$1.42: GAAP diluted EPS is guided at $1.22 to $1.42. The bridge to non-GAAP deducts $0.72 per share for share-based compensation and $0.11 per share for other items. Source
  • Q4 non-GAAP EPS guided $2.05-$2.25: Non-GAAP diluted EPS is guided at $2.05 to $2.25 for the fourth quarter of fiscal 2026. Source

“a significant inflection point in the execution of our growth strategy”

Cristiano Amon, President and CEO of Qualcomm Incorporated

Strategy, Modular and Investor Day

  • Modular acquisition completed: The company completed its acquisition of Modular Inc, which the release describes as creating an open software foundation for generative and agentic AI. Source
  • Fiscal 2029 non-handset target set: The Investor Day vision includes total non-handset revenues of $40 billion by fiscal 2029, which the company describes as nearly double the target shared in November 2024. Source
  • Fiscal 2027 described as inflection: Management called fiscal 2027 a significant inflection point in executing the growth strategy, citing expected acceleration in non-handset growth including Data Center. Source

Capital, cash and balance sheet

  • Nine-month operating cash lower: Net cash from operating activities was $8,405 million for the nine months, against $10,016 million a year earlier. Source
  • Capital expenditures more than doubled: Capital expenditures were $1,578 million for the nine months, against $785 million a year earlier. Purchases of debt and equity marketable securities were $2,449 million. Source
  • Cash balance declined: Cash and cash equivalents were $4,533 million, against $5,435 million at March 29, 2026. Marketable securities were $3,771 million. Source
  • Short-term debt increased: Short-term debt was $2,489 million at June 28, 2026, up from $498 million at March 29, 2026. Source
  • Long-term debt reduced: Long-term debt was $12,781 million at June 28, 2026, down from $14,772 million at March 29, 2026. Source
  • Inventories rose to $8,379M: Inventories were $8,379 million, up from $7,368 million at March 29, 2026 and $6,526 million at September 28, 2025. Source

Returns to shareholders

  • $2.3B returned in the quarter: In the third quarter the company returned $2.3 billion to stockholders, including $973 million, or $0.92 per share, in cash dividends and $1.4 billion for 8 million shares repurchased. Source
  • Nine-month buybacks reached $6.8B: Repurchases and retirements of common stock were $6,806 million for the nine months, against $6,347 million. Dividends paid were $2,868 million, against $2,848 million. Source
  • Diluted share count lower: Diluted shares were 1,069 million in the third quarter, against 1,099 million a year earlier. Source

Tax and investment income

  • Tax expense and nine-month benefit: Income tax expense was $460 million in the quarter, against $286 million a year earlier. For the nine months the company recorded an income tax benefit of $4,136 million, against expense of $1,034 million. Source
  • Second-quarter valuation allowance release: The second-quarter release recorded a $5.7 billion income tax benefit, or $5.33 per share, from releasing a valuation allowance set up in the fourth quarter of fiscal 2025.
  • Investment income rose to $1,014M: Investment and other income, net was $1,014 million, against $358 million a year earlier. Of this amount, $771 million is shown as excluded for QSI. Source

Coming up, as management said on 29 July 2026

  • Fiscal 2027 non-handset growth expected: Management expects year-over-year growth in non-handset revenues, including Data Center, to accelerate in fiscal 2027. Source
  • Pricing benefit to margins over time: Management expects the pricing actions to benefit gross margins over time as the pricing changes gradually come into effect. Source

Figures management reported

FigureReported
QCT Automotive consecutive quarters of double-digit revenue growth Source23
Combined QCT Automotive and IoT revenue growth Source28%
QCT Automotive revenues Source$1,588 million, up 61%
QCT IoT revenues Source$1,830 million, up 9%
QCT Handsets revenues Source$5,086 million, down 20%
Non-handset revenue growth, fiscal 2026 Source24%

Risks management discussed

  • Operational: Management described a challenging memory and supply environment as a condition affecting the quarter. Source

Earlier plans management reported on

  • Met: Third-quarter revenue guidance in the prior release was $9.2B to $10.0B; the company reports revenues at the high end of guidance. Source
  • Not stated: Management refers to the November 2024 non-handset target, which the fiscal 2029 figure is described as nearly doubling. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.