QUALCOMM INC. Form 10-Q Summary
Business Context and Reporting Period
This summary covers the quarterly period ended June 28, 2026 (Third Quarter of Fiscal 2026). QUALCOMM Incorporated operates primarily through two segments: Qualcomm CDMA Technologies (QCT), which supplies integrated circuit platforms, and Qualcomm Technology Licensing (QTL), which licenses intellectual property. The company also maintains a strategic investments segment (QSI).
Key Financial Metrics
| Metric | Three Months Ended June 28, 2026 | Nine Months Ended June 28, 2026 |
|---|---|---|
| Total Revenues | $9,947 million | $32,798 million |
| Net Income | $2,002 million | $12,377 million |
| Diluted EPS | $1.87 | $11.53 |
| Operating Cash Flow (9mo) | $8,405 million | |
| Cash & Equivalents | $4,533 million (as of June 28, 2026) | |
| Total Debt | $15,270 million ($2.5B short-term, $12.8B long-term) | |
| Gross Margin | 53% | 54% (9mo) |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 4% year-over-year (YoY) in the quarter and 1% YoY for the nine-month period. QCT revenues fell 5% due to lower handset shipments, partially offset by growth in automotive (+61% YoY) and IoT (+9% YoY) segments.
- Net Income Volatility: Net income decreased 25% YoY in the quarter ($2.0B vs. $2.7B) but increased 43% YoY for the nine-month period ($12.4B vs. $8.7B). The nine-month increase was driven by a significant non-recurring tax benefit.
- Tax Benefit: The company recorded a $5.7 billion income tax benefit in the second quarter of fiscal 2026 due to the release of a valuation allowance on federal deferred tax assets. This followed new IRS guidance allowing the reduction of the Corporate Alternative Minimum Tax (CAMT) by previously capitalized R&D expenditures.
- Investment Gains: Investment and other income increased significantly ($1.0B in the quarter vs. $358M YoY), primarily due to net gains from the initial public offerings of certain QSI equity investments.
- Acquisitions: The company completed the acquisition of Alphawave IP Group plc for $2.3 billion in Q1 2026 and Modular Inc. for approximately $3.1 billion in July 2026 (post-period end), expanding its data center and AI capabilities.
Guidance, Outlook, and Risks
- Supply Chain Constraints: Management expects recent memory supply constraints and related price increases to adversely affect demand from handset OEMs, negatively impacting financial results. Broad-based input cost increases across the semiconductor industry may also pressure margins.
- Customer Vertical Integration: The company anticipates a significant negative impact on QCT revenues as major customers, specifically Apple, increasingly utilize their own modem products rather than Qualcomm's.
- Geopolitical Risks: Ongoing U.S./China trade tensions and national security policies pose risks to revenue concentration in China and supply chain stability.
- Legal Proceedings: Significant litigation continues with ParkerVision (patent infringement) and Arm Ltd. (breach of license agreements regarding Nuvia technology). While no accruals were recorded, unfavorable resolutions could materially affect operations.
- Capital Return: The company announced a new $20.0 billion stock repurchase program in March 2026. As of June 28, 2026, $20.6 billion remained authorized. Dividends per share were $0.92 for the quarter.
Investor Verification Checklist
- Tax Rate Sustainability: Verify the sustainability of the effective tax rate, noting the $5.7 billion one-time benefit from the valuation allowance release.
- Handset Demand: Monitor the impact of memory supply constraints and pricing on major OEM build plans and inventory levels.
- Apple Modem Transition: Assess the timeline and volume impact of Apple's transition to in-house modem technology.
- Acquisition Integration: Review the integration progress and revenue contribution from the Alphawave and Modular acquisitions.
- Legal Outcomes: Track developments in the ParkerVision and Arm Ltd. litigation, specifically regarding potential damages or injunctions.