filings.toolsQualcomm 10-Q 2023-12-24
Filed 2024-01-31. 8 sections, 252K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark one)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 24, 2023
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 0-19528
QUALCOMM Incorporated
(Exact name of registrant as specified in its charter)
| Delaware | 95-3685934 | |||||||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| 5775 Morehouse Dr., San Diego, California | 92121-1714 | |||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) |
(858) 587-1121
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $0.0001 par value | QCOM | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares outstanding of the registrant’s common stock was 1,116 million at January 29, 2024.
QUALCOMM Incorporated
Form 10-Q
For the Quarter Ended December 24, 2023
Risk Factors Summary:
Our business is subject to numerous risks and uncertainties, including those described in the section labeled “Risk Factors” in “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report. These risks include, but are not limited to, the following:
RISKS RELATED TO OUR OPERATING BUSINESSES
*•*We derive a significant portion of our revenues from a small number of customers and licensees, and particularly from their sale of premium tier handset devices. If revenues derived from these customers or licensees decrease or the timing of such revenues fluctuates, our business and results of operations could be negatively affected.
*•*Our business, particularly our semiconductor business, may suffer as a result of our customers vertically integrating (i.e., developing their own integrated circuit products).
*•*A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.
RISKS RELATED TO NEW INITIATIVES
*•*Our growth depends in part on our ability to extend our technologies and products into new and expanded product areas, and industries and applications beyond mobile handsets. Our research, development and other investments in these new and expanded product areas, industries and applications, and related technologies and products, as well as in our existing technologies and products, and new technologies, may not generate operating income or contribute to future results of operations that meet our expectations.
*•*We may engage in acquisitions and other strategic transactions or make investments, or be unable to consummate planned strategic acquisitions, which could adversely affect our results of operations or fail to enhance stockholder value.
RISKS RELATED TO SUPPLY AND MANUFACTURING
*•*We depend on a limited number of third-party suppliers for the procurement, manufacture, assembly and testing of our products manufactured in a fabless production model. If we fail to execute supply strategies that provide supply assurance, technology leadership and reasonable margins, our business and results of operations may be harmed. We are also subject to order and shipment uncertainties that could negatively impact our results of operations.
*•*There are numerous risks associated with the operation and control of our manufacturing facilities, including a higher portion of fixed costs relative to a fabless model; environmental compliance and liability; impacts related to climate change; exposure to natural disasters, health crises, geopolitical conflicts and cyber-attacks; timely supply of equipment and materials; and various manufacturing issues.
RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION
*•*Our business and operations could suffer in the event of security breaches of our IT systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information.
RISKS RELATED TO HUMAN CAPITAL MANAGEMENT
*•*We may not be able to attract or retain qualified employees.
RISKS SPECIFIC TO OUR LICENSING BUSINESS
*•*The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring.
*•*Efforts by some OEMs to avoid paying fair and reasonable royalties for the use of our intellectual property may require the investment of substantial management time and financial resources and may result in legal decisions or actions by governments, courts, regulators or agencies, Standards Development Organizations (SDOs) or other industry organizations that harm our business.
- Changes in our patent licensing practices, whether due to governmental investigations, legal challenges or otherwise, could adversely impact our business and results of operations.
RISKS RELATED TO REGULATORY AND LEGAL CHALLENGES
*•*Our business may suffer as a result of adverse rulings in governmental investigations or proceedings or other legal proceedings.
RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION
*•*Our revenues depend on our customers’ and licensees’ sales of products and services based on CDMA, OFDMA and other communications technologies, including 5G, and customer demand for our products based on these technologies.
*•*Our industry is subject to intense competition in an environment of rapid technological change. Our success depends in part on our ability to adapt to such change and compete effectively; and such change and competition could result in decreased demand for our products and technologies or declining average selling prices for our products or those of our customers or licensees.
RISKS RELATED TO PRODUCT DEFECTS OR SECURITY VULNERABILITIES
*•*Failures in our products, or in the products of our customers or licensees, including those resulting from security vulnerabilities, defects or errors, could harm our business.
RISKS RELATED TO INTELLECTUAL PROPERTY
*•*The enforcement and protection of our intellectual property may be expensive, could fail to prevent misappropriation or unauthorized use of our intellectual property, could result in the loss of our ability to enforce one or more patents, and could be adversely affected by changes in patent laws, by laws in certain foreign jurisdictions that may not effectively protect our intellectual property and by ineffective enforcement of laws in such jurisdictions.
*•*Claims by other companies that we infringe their intellectual property could adversely affect our business.
*•*Our use of open source software may harm our business.
GENERAL RISK FACTORS
*•*We operate in the highly cyclical semiconductor industry, which is subject to significant downturns. We are also susceptible to declines in global, regional and local economic conditions generally. Our stock price and financial results are subject to substantial quarterly and annual fluctuations due to these dynamics, among others.
*•*Geopolitical conflicts, natural disasters, pandemics and other health crises, and other factors outside of our control, could significantly disrupt our business.
*•*Our business may suffer due to the impact of, or our failure to comply with, the various existing, new or amended laws, regulations, policies or standards to which we are subject.
*•*There are risks associated with our debt.
*•*Tax liabilities could adversely affect our results of operations.
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| QUALCOMM Incorporated | ||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (In millions, except par value amounts) | ||||||||||||||
| (Unaudited) |
| December 24, 2023 | September 24, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 8,133 | $ | 8,450 | |||||||
| Marketable securities | 3,921 | 2,874 | |||||||||
| Accounts receivable, net | 3,513 | 3,183 | |||||||||
| Inventories | 6,247 | 6,422 | |||||||||
| Held for sale assets | 337 | 341 | |||||||||
| Other current assets | 1,288 | 1,194 | |||||||||
| Total current assets | 23,439 | 22,464 | |||||||||
| Deferred tax assets | 3,579 | 3,310 | |||||||||
| Property, plant and equipment, net | 4,907 | 5,042 | |||||||||
| Goodwill | 10,722 | 10,642 | |||||||||
| Other intangible assets, net | 1,387 | 1,408 | |||||||||
| Held for sale assets | 69 | 88 | |||||||||
| Other assets | 8,032 | 8,086 | |||||||||
| Total assets | $ | 52,135 | $ | 51,040 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Trade accounts payable | $ | 2,147 | $ | 1,912 | |||||||
| Payroll and other benefits related liabilities | 1,757 | 1,685 | |||||||||
| Unearned revenues | 210 | 293 | |||||||||
| Short-term debt | 914 | 914 | |||||||||
| Held for sale liabilities | 336 | 333 | |||||||||
| Other current liabilities | 3,805 | 4,491 | |||||||||
| Total current liabilities | 9,169 | 9,628 | |||||||||
| Unearned revenues | 93 | 99 | |||||||||
| Income taxes payable | 1,056 | 1,080 | |||||||||
| Long-term debt | 14,566 | 14,484 | |||||||||
| Held for sale liabilities | 43 | 38 | |||||||||
| Other liabilities | 4,150 | 4,130 | |||||||||
| Total liabilities | 29,077 | 29,459 | |||||||||
| Commitments and contingencies (Note 5) | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding | — | — | |||||||||
| Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,118 and 1,114 shares issued and outstanding, respectively | — | 490 | |||||||||
| Retained earnings | 22,565 | 20,733 | |||||||||
| Accumulated other comprehensive income | 493 | 358 | |||||||||
| Total stockholders’ equity | 23,058 | 21,581 | |||||||||
| Total liabilities and stockholders’ equity | $ | 52,135 | $ | 51,040 |
| See accompanying notes. | ||||||||||||||
| QUALCOMM Incorporated | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (In millions, except per share data) | ||||||||||||||
| (Unaudited) |
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Equipment and services | $ | 8,316 | $ | 7,784 | |||||||||||||||||||
| Licensing | 1,619 | 1,679 | |||||||||||||||||||||
| Total revenues | 9,935 | 9,463 | |||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenues | 4,312 | 4,044 | |||||||||||||||||||||
| Research and development | 2,096 | 2,251 | |||||||||||||||||||||
| Selling, general and administrative | 627 | 623 | |||||||||||||||||||||
| Other | (28) | 80 | |||||||||||||||||||||
| Total costs and expenses | 7,007 | 6,998 | |||||||||||||||||||||
| Operating income | 2,928 | 2,465 | |||||||||||||||||||||
| Interest expense | (178) | (170) | |||||||||||||||||||||
| Investment and other income, net | 212 | 76 | |||||||||||||||||||||
| Income from continuing operations before income taxes | 2,962 | 2,371 | |||||||||||||||||||||
| Income tax expense | (151) | (98) | |||||||||||||||||||||
| Income from continuing operations | 2,811 | 2,273 | |||||||||||||||||||||
| Discontinued operations, net of income taxes | (44) | (38) | |||||||||||||||||||||
| Net income | $ | 2,767 | $ | 2,235 | |||||||||||||||||||
| Basic earnings per share: | |||||||||||||||||||||||
| Continuing operations | $ | 2.52 | $ | 2.02 | |||||||||||||||||||
| Discontinued operations | (0.04) | (0.03) | |||||||||||||||||||||
| Net income | $ | 2.48 | $ | 1.99 | |||||||||||||||||||
| Diluted earnings per share: | |||||||||||||||||||||||
| Continuing operations | $ | 2.50 | $ | 2.01 | |||||||||||||||||||
| Discontinued operations | (0.04) | (0.03) | |||||||||||||||||||||
| Net income | $ | 2.46 | $ | 1.98 | |||||||||||||||||||
| Shares used in per share calculations: | |||||||||||||||||||||||
| Basic | 1,116 | 1,122 | |||||||||||||||||||||
| Diluted | 1,127 | 1,131 | |||||||||||||||||||||
| See accompanying notes. | ||||||||||||||
| QUALCOMM Incorporated | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||
| (In millions) | ||||||||||||||
| (Unaudited) |
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Net income | $ | 2,767 | $ | 2,235 | |||||||||||||||||||
| Other comprehensive income, net of income taxes: | |||||||||||||||||||||||
| Foreign currency translation gains | 83 | 162 | |||||||||||||||||||||
| Net unrealized gains on available-for-sale debt securities | 32 | 14 | |||||||||||||||||||||
| Net unrealized gains on derivative instruments | 17 | 119 | |||||||||||||||||||||
| Other gains | 1 | — | |||||||||||||||||||||
| Other reclassifications included in net income | 2 | 20 | |||||||||||||||||||||
| Total other comprehensive income | 135 | 315 | |||||||||||||||||||||
| Comprehensive income | $ | 2,902 | $ | 2,550 |
| See accompanying notes. | ||||||||||||||
| QUALCOMM Incorporated | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (In millions) | ||||||||||||||
| (Unaudited) |
| Three Months Ended | |||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||
| Operating Activities: | |||||||||||
| Net income from continuing operations | $ | 2,811 | $ | 2,273 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization expense | 437 | 398 | |||||||||
| Income tax provision less than income tax payments | (1,012) | (120) | |||||||||
| Share-based compensation expense | 602 | 634 | |||||||||
| Net gains on marketable securities and other investments | (71) | (25) | |||||||||
| Other items, net | 9 | (33) | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable, net | (325) | 1,694 | |||||||||
| Inventories | 165 | (476) | |||||||||
| Other assets | 115 | 409 | |||||||||
| Trade accounts payable | 241 | (1,264) | |||||||||
| Payroll, benefits and other liabilities | 74 | (286) | |||||||||
| Unearned revenues | (81) | (81) | |||||||||
| Net cash used by operating activities from discontinued operations | (16) | (28) | |||||||||
| Net cash provided by operating activities | 2,949 | 3,095 | |||||||||
| Investing Activities: | |||||||||||
| Capital expenditures | (214) | (398) | |||||||||
| Purchases of debt and equity marketable securities | (1,452) | (22) | |||||||||
| Proceeds from sales and maturities of debt and equity marketable securities | 463 | 219 | |||||||||
| Acquisitions and other investments, net of cash acquired | (60) | (29) | |||||||||
| Proceeds from sales of property, plant and equipment | 5 | 111 | |||||||||
| Other items, net | 2 | (14) | |||||||||
| Net cash used by investing activities | (1,256) | (133) | |||||||||
| Financing Activities: | |||||||||||
| Proceeds from short-term debt | 400 | 1,458 | |||||||||
| Repayment of short-term debt | (400) | (1,955) | |||||||||
| Proceeds from long-term debt | — | 1,880 | |||||||||
| Repurchases and retirements of common stock | (784) | (1,270) | |||||||||
| Dividends paid | (895) | (842) | |||||||||
| Payments of tax withholdings related to vesting of share-based awards | (370) | (309) | |||||||||
| Other items, net | 8 | 23 | |||||||||
| Net cash used by financing activities | (2,041) | (1,015) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 15 | 27 | |||||||||
| Net (decrease) increase in total cash and cash equivalents | (333) | 1,974 | |||||||||
| Total cash and cash equivalents at beginning of period (including $77 and $326 classified as held for sale at September 24, 2023 and September 25, 2022, respectively) | 8,527 | 3,099 | |||||||||
| Total cash and cash equivalents at end of period (including $61 and $265 classified as held for sale at December 24, 2023 and December 25, 2022, respectively) | $ | 8,194 | $ | 5,073 | |||||||
See accompanying notes.
| QUALCOMM Incorporated | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY | ||||||||||||||
| (In millions, except per share data) | ||||||||||||||
| (Unaudited) |
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Total stockholders’ equity, beginning balance | $ | 21,581 | $ | 18,013 | |||||||||||||||||||
| Common stock and paid-in capital: | |||||||||||||||||||||||
| Balance at beginning of period | $ | 490 | $ | 195 | |||||||||||||||||||
| Common stock issued under employee benefit plans | 1 | 38 | |||||||||||||||||||||
| Repurchases and retirements of common stock | (773) | (591) | |||||||||||||||||||||
| Share-based compensation | 629 | 667 | |||||||||||||||||||||
| Tax withholdings related to vesting of share-based payments | (370) | (309) | |||||||||||||||||||||
| Common stock issued in acquisition | 23 | — | |||||||||||||||||||||
| Balance at end of period | — | — | |||||||||||||||||||||
| Retained earnings: | |||||||||||||||||||||||
| Balance at beginning of period | 20,733 | 17,840 | |||||||||||||||||||||
| Net income | 2,767 | 2,235 | |||||||||||||||||||||
| Repurchases and retirements of common stock | (11) | (679) | |||||||||||||||||||||
| Dividends | (924) | (879) | |||||||||||||||||||||
| Balance at end of period | 22,565 | 18,517 | |||||||||||||||||||||
| Accumulated other comprehensive income (loss): | |||||||||||||||||||||||
| Balance at beginning of period | 358 | (22) | |||||||||||||||||||||
| Other comprehensive income | 135 | 315 | |||||||||||||||||||||
| Balance at end of period | 493 | 293 | |||||||||||||||||||||
| Total stockholders’ equity, ending balance | $ | 23,058 | $ | 18,810 | |||||||||||||||||||
| Dividends per share announced | $ | 0.80 | $ | 0.75 |
See accompanying notes.
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Note 1. Basis of Presentation and Significant Accounting Policies Update
Financial Statement Preparation. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for our fiscal year ended September 24, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. Each of the three months ended December 24, 2023 and December 25, 2022 included 13 weeks.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.
Recent Accounting Pronouncements.
Segment Reporting Disclosures: In November 2023, the Financial Accounting Standards Board (FASB) issued new requirements to disclose certain incremental segment information on an annual and interim basis, including (among other items) additional disclosure about significant segment expenses. We will adopt the new requirements for our annual periods starting in fiscal 2025 (and interim periods thereafter) on a retrospective basis.
Income Tax Disclosures: In December 2023, the FASB issued new requirements to disclose annually certain additional disaggregated income tax information related to the effective tax rate reconciliation and income taxes paid, among other items. We will adopt the new requirements starting in fiscal 2026 on a retrospective basis.
Note 2. Composition of Certain Financial Statement Items
| Inventories (in millions) | |||||||||||
| December 24, 2023 | September 24, 2023 | ||||||||||
| Raw materials | $ | 178 | $ | 176 | |||||||
| Work-in-process | 3,941 | 4,096 | |||||||||
| Finished goods | 2,128 | 2,150 | |||||||||
| $ | 6,247 | $ | 6,422 |
Revenues. We disaggregate our revenues by segment (Note 6), by products and services (as presented on our condensed consolidated statement of operations), and for our QCT (Qualcomm CDMA Technologies) segment, by revenue stream, which is based on the industry and application in which our products are sold (as presented below). In certain cases, the determination of QCT revenues by industry and application requires the use of certain assumptions. Substantially all of QCT’s revenues consist of equipment revenues that are recognized at a point in time, and substantially all of QTL’s (Qualcomm Technology Licensing) revenues represent licensing revenues that are recognized over time and are principally from royalties generated through our licensees’ sales of mobile handsets.
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
QCT revenue streams were as follows (in millions):
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Handsets (1) | $ | 6,687 | $ | 5,754 | |||||||||||||||||||||||||||||||||||||||||||
| Automotive (2) | 598 | 456 | |||||||||||||||||||||||||||||||||||||||||||||
| IoT (internet of things) (3) | 1,138 | 1,682 | |||||||||||||||||||||||||||||||||||||||||||||
| Total QCT revenues | $ | 8,423 | $ | 7,892 |
(1) Includes revenues from products sold for use in mobile handsets.
(2) Includes revenues from products sold for use in automobiles, including connectivity, digital cockpit and advanced driver assistance systems (ADAS) and automated driving (AD).
(3) Primarily includes products sold for use in the following industries and applications: consumer (including computing, voice and music and extended reality (XR)), edge networking (including mobile broadband and wireless access points) and industrial (including handhelds, retail, tracking and logistics and utilities).
Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods generally include certain QCT sales-based royalty revenues related to system software, certain amounts related to QCT customer incentives and QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and were as follows (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Revenues recognized from previously satisfied performance obligations | $ | 176 | $ | 199 |
Unearned revenues (which are considered contract liabilities) consist primarily of certain customer contracts for which QCT received fees upfront and QTL license fees for intellectual property with continuing performance obligations. In the three months ended December 24, 2023 and December 25, 2022, we recognized revenues of $181 million and $173 million, respectively, that were recorded as unearned revenues at September 24, 2023 and September 25, 2022, respectively.
Remaining performance obligations, which are primarily included in unearned revenues (as presented on our condensed consolidated balance sheet), represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements.
Concentrations. A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL segments. The comparability of customer/licensee concentrations for the interim periods presented are impacted by the timing of customer/licensee device launches and/or innovation cycles and other seasonal trends, among other fluctuations in demand. Revenues from each customer/licensee that were 10% or greater of total revenues were as follows:
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Customer/licensee (x) | 25 | % | 34 | % | |||||||||||||||||||
| Customer/licensee (y) | 18 | 14 | |||||||||||||||||||||
| Customer/licensee (z) | 14 | * |
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Other Income, Costs and Expenses. Other income and expenses in the first quarter of fiscal 2024 and 2023 included certain restructuring amounts (primarily related to accrued severance costs) from cost reduction actions initiated in fiscal 2023.
| Investment and Other Income (Expense), Net (in millions) | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Interest and dividend income | $ | 149 | $ | 55 | |||||||||||||||||||
| Net gains on marketable securities | 11 | 11 | |||||||||||||||||||||
| Net gains on other investments | 5 | — | |||||||||||||||||||||
| Net gains on deferred compensation plan assets | 66 | 26 | |||||||||||||||||||||
| Impairment losses on other investments | (12) | (14) | |||||||||||||||||||||
| Other | (7) | (2) | |||||||||||||||||||||
| $ | 212 | $ | 76 |
Discontinued Operations. For the periods presented, Veoneer’s Restraint Control Systems (RCS) business assets and liabilities are reflected as held for sale on our condensed consolidated balance sheets, and the results of operations and cash flows of Veoneer’s Non-Arriver businesses (primarily consisting of the Active Safety and RCS businesses) are presented as discontinued operations on a one quarter reporting lag (through the date of disposition by SSW Partners). Cash flows from investing and financing activities from discontinued operations reported for the periods presented were not material.
On June 1, 2023, SSW Partners completed the sale of the Active Safety business to Magna International Inc. for net cash proceeds of $1.5 billion. In December 2023, SSW Partners entered into a definitive agreement to sell the RCS business. We expect that SSW Partners will complete the sale of the RCS business within early calendar 2024, subject to certain required regulatory approvals and other closing conditions being met.
Note 3. Income Taxes
We estimate our annual effective income tax rate to be 7% for fiscal 2024, which is lower than the U.S. federal statutory rate, primarily due to (i) a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income (FDII) at a 13% effective tax rate, which includes certain benefits from the requirement to capitalize research and development expenditures for federal income tax purposes, (ii) a benefit from our federal research and development tax credit and (iii) a benefit related to foreign currency gains on a noncurrent receivable related to our refund claim of Korean withholding tax. Our effective tax rate of 5% for the first quarter of fiscal 2024 was lower than our estimated annual effective tax rate of 7% primarily due to $79 million of net discrete tax benefits. Our effective tax rate of 4% for the first quarter of fiscal 2023 included $150 million of discrete net tax benefits. Such discrete net tax benefits primarily related to foreign currency gains on a noncurrent receivable related to our refund claim of Korean withholding tax.
Income taxes payable (recorded in other current liabilities) were $1.0 billion and $1.7 billion at December 24, 2023 and September 24, 2023, respectively. This decrease was primarily due to certain U.S. federal income tax payments made in the first quarter of fiscal 2024 that were previously postponed by the Internal Revenue Service (IRS).
Note 4. Capital Stock
Stock Repurchase Program. On October 12, 2021, we announced a $10.0 billion stock repurchase program. The stock repurchase program has no expiration date. At December 24, 2023, $4.4 billion remained authorized for repurchase under our stock repurchase program.
Shares Outstanding. Shares of common stock outstanding at December 24, 2023 were as follows (in millions):
| Balance at beginning of period | 1,114 | ||||
| Issued | 10 | ||||
| Repurchased | (6) | ||||
| Balance at end of period | 1,118 |
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Dividends. On January 19, 2024, we announced a cash dividend of $0.80 per share on our common stock, payable on March 21, 2024 to stockholders of record as of the close of business on February 29, 2024.
Earnings Per Common Share. Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding and the weighted-average number of dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans, during the reporting period, using the treasury stock method. The following table provides information about the diluted earnings per share calculation (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Dilutive common share equivalents included in diluted shares | 11 | 9 | |||||||||||||||||||||
| Shares of common stock equivalents not included because the effect would be anti-dilutive or certain performance conditions were not satisfied at the end of the period | 14 | 5 |
Note 5. Commitments and Contingencies
Legal and Regulatory Proceedings.
Consolidated Securities Class Action Lawsuit: On January 23, 2017 and January 26, 2017, securities class action complaints were filed by purported stockholders of us in the United States District Court for the Southern District of California against us and certain of our then current and former officers and directors. The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with certain allegations that we are or were engaged in anticompetitive conduct. The complaints sought unspecified damages, interest, fees and costs. The court consolidated the two actions, and on July 3, 2017, the plaintiffs filed a consolidated amended complaint asserting the same basic theories of liability and requesting the same basic relief. On May 23, 2022, the plaintiffs filed a motion for class certification, and on March 20, 2023, the court issued an order granting in part and denying in part the plaintiffs’ motion for class certification. The order denied class certification on the basis of alleged misrepresentations relating to our chip-level licensing practices, but certified a class on the basis of alleged misrepresentations relating to the separate operations of QCT and QTL. Trial is scheduled to begin on October 28, 2024. We intend to continue to vigorously defend ourselves in this matter.
Consumer Class Action Lawsuits: Beginning in January 2017, a number of consumer class action complaints were filed against us in the United States District Courts for the Southern and Northern Districts of California, each on behalf of a putative class of purchasers of cellular phones and other cellular devices. The cases filed in the Southern District of California were subsequently transferred to the Northern District of California. On July 11, 2017, the plaintiffs filed a consolidated amended complaint alleging that we violated California and federal antitrust and unfair competition laws by, among other things, refusing to license standard-essential patents to our competitors, conditioning the supply of certain of our baseband chipsets on the purchaser first agreeing to license our entire patent portfolio, entering into exclusive deals with companies, including Apple Inc., and charging unreasonably high royalties that do not comply with our commitments to standard setting organizations. The complaint sought unspecified damages and disgorgement and/or restitution, as well as an order that we be enjoined from further unlawful conduct. On September 27, 2018, the court certified the class. We appealed the court’s class certification order to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit). On September 29, 2021, the Ninth Circuit vacated the class certification order, ruling that the district court had failed to correctly assess the propriety of applying California law to a nationwide class, and remanded the case to the district court. On June 10, 2022, the plaintiffs filed an amended complaint, limiting the proposed class to California residents rather than a nationwide class. We filed a motion to dismiss the amended complaint, and on January 6, 2023, the court issued an order granting in part and denying in part our motion to dismiss. We subsequently filed a motion for summary judgment on the plaintiffs’ remaining claims. The court granted our motion in its entirety and, on October 5, 2023, entered final judgment in Qualcomm’s favor. On November 2, 2023, the plaintiffs filed a notice of appeal to the Ninth Circuit. We intend to continue to vigorously defend ourselves in this matter.
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Beginning in November 2017, several other consumer class action complaints were filed against us in Canada (in the Supreme Court of British Columbia and the Quebec Superior Court), Israel (in the Haifa District Court) and the United Kingdom (in the Competition Appeal Tribunal), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging violations of certain of those countries’ competition and consumer protection laws and seeking damages. The claims in these complaints are similar to those in the U.S. consumer class action complaints described above. These matters are at various stages of litigation, and we intend to continue to vigorously defend ourselves.
ParkerVision, Inc. v. QUALCOMM Incorporated: On May 1, 2014, ParkerVision filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents. On August 21, 2014, ParkerVision amended the complaint, alleging that we infringed 11 ParkerVision patents and sought damages and injunctive and other relief. ParkerVision subsequently reduced the number of patents asserted to three. The asserted patents are now expired, and injunctive relief is no longer available. ParkerVision continues to seek damages related to the sale of many of our radio frequency (RF) products sold between 2008 and 2018. On March 23, 2022, the court entered judgment in our favor on all claims and closed the case. On April 20, 2022, ParkerVision filed a notice of appeal to the United States Court of Appeals for the Federal Circuit, and on November 6, 2023, the court held a hearing on the appeal. The court has not yet issued a ruling. We intend to continue to vigorously defend ourselves in this matter.
Arm Ltd. v. QUALCOMM Incorporated: On August 31, 2022, Arm Ltd. (ARM) filed a complaint against us in the United States District Court for the District of Delaware. Our subsidiaries Qualcomm Technologies, Inc. and NuVia, Inc. (Nuvia) are also named in the complaint. The complaint alleges that following our acquisition of Nuvia, we and Nuvia breached Nuvia’s Architecture License Agreement with ARM (the Nuvia ALA) by failing to comply with the termination obligations under the Nuvia ALA. The complaint seeks specific performance, including that we cease all use of and destroy any technology that was developed under the Nuvia ALA, including processor core technology. ARM also contends that we violated the Lanham Act through trademark infringement and false designation of origin through unauthorized use of ARM’s trademarks and seeks associated injunctive and declaratory relief. ARM further seeks exemplary or punitive damages, costs, expenses and reasonable attorney’s fees, and equitable relief addressing any infringement occurring after entry of judgment.
On September 30, 2022, we filed our Answer and Counterclaim in response to ARM’s complaint denying ARM’s claims. Our counterclaim seeks a declaratory judgment that we did not breach the Nuvia ALA or the Technology License Agreement between Nuvia and ARM and that, following the acquisition of Nuvia, our architected cores (including all further developments, iterations or instantiations of the technology we acquired from Nuvia), server System-on-Chip (SoC) and compute SoC are fully licensed under our existing Architecture License Agreement and Technology License Agreement with ARM (the ARM-Qualcomm Agreements). We further seek an order enjoining ARM from making any claim that our products are not licensed under the ARM-Qualcomm Agreements, are not ARM-compliant or that we are prohibited from using ARM’s marks in the marketing of any such products. On October 26, 2022, we filed an Amended Counterclaim seeking additional declaratory relief that certain statements ARM is making in the marketplace concerning our rights under the ARM-Qualcomm Agreements are false, and that ARM has no right to prevent us from shipping our products, which are validly licensed. Trial is scheduled to begin on September 23, 2024. We intend to continue to vigorously defend ourselves in this matter.
Contingent Losses and Other Considerations: Litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss, particularly in antitrust and trade regulation investigations. We have not recorded any accrual at December 24, 2023 for contingent losses associated with the pending matters described above based on our belief that losses, while reasonably possible, are not probable. Further, any possible amount or range of loss cannot be reasonably estimated at this time. The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows. We are engaged in numerous other legal actions not described above (for example, our 2010 European Commission matter relating to the Icera complaint, and other matters arising in the ordinary course of our business, including those relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights) and, while there can be no assurance, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Note 6. Segment Information
We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT semiconductor business and our QTL licensing business. QCT develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies, including RFFE (radio frequency front-end), for use in mobile devices; automotive systems for connectivity, digital cockpit and ADAS/AD; and IoT including consumer electronic devices; industrial devices; and edge networking products. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our cloud computing processing initiative.
The table below presents revenues and earnings (loss) before income taxes (EBT) for reportable segments (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| QCT | $ | 8,423 | $ | 7,892 | |||||||||||||||||||
| QTL | 1,460 | 1,524 | |||||||||||||||||||||
| QSI | 13 | 7 | |||||||||||||||||||||
| Reconciling items | 39 | 40 | |||||||||||||||||||||
| Total | $ | 9,935 | $ | 9,463 | |||||||||||||||||||
| EBT | |||||||||||||||||||||||
| QCT | $ | 2,593 | $ | 2,183 | |||||||||||||||||||
| QTL | 1,080 | 1,117 | |||||||||||||||||||||
| QSI | 11 | (8) | |||||||||||||||||||||
| Reconciling items | (722) | (921) | |||||||||||||||||||||
| Total | $ | 2,962 | $ | 2,371 |
Reconciling items for revenues and EBT in the previous table were as follows (in millions):
| Three Months Ended | |||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Nonreportable segments | $ | 39 | $ | 40 | |||||||||||||||||||
| EBT | |||||||||||||||||||||||
| Unallocated cost of revenues | $ | (56) | $ | (65) | |||||||||||||||||||
| Unallocated research and development expenses | (533) | (522) | |||||||||||||||||||||
| Unallocated selling, general and administrative expenses | (185) | (167) | |||||||||||||||||||||
| Unallocated other income (expenses) | 28 | (80) | |||||||||||||||||||||
| Unallocated interest expense | (178) | (170) | |||||||||||||||||||||
| Unallocated investment and other income, net | 208 | 87 | |||||||||||||||||||||
| Nonreportable segments | (6) | (4) | |||||||||||||||||||||
| $ | (722) | $ | (921) |
| QUALCOMM Incorporated | ||||||||||||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||||||||
| (Unaudited) |
Note 7. Fair Value Measurements and Marketable Securities
The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at December 24, 2023 (in millions):
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents | $ | 4,979 | $ | 1,796 | $ | — | $ | 6,775 | |||||||||||||||
| Marketable securities: | |||||||||||||||||||||||
| Corporate bonds and notes | — | 3,220 | — | 3,220 | |||||||||||||||||||
| U.S. Treasury securities and government-related securities | 220 | 65 | — | 285 | |||||||||||||||||||
| Mortgage- and asset-backed securities | — | 280 | — | 280 | |||||||||||||||||||
| Equity securities | 136 | — | — | 136 | |||||||||||||||||||
| Total marketable securities | 356 | 3,565 | — | 3,921 | |||||||||||||||||||
| Derivative instruments | — | 30 | — | 30 | |||||||||||||||||||
| Other investments | 815 | — | 51 | 866 | |||||||||||||||||||
| Total assets measured at fair value | $ | 6,150 | $ | 5,391 | $ | 51 | $ | 11,592 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Derivative instruments | $ | — | $ | 205 | $ | — | $ | 205 | |||||||||||||||
| Other liabilities | 813 | — | — | 813 | |||||||||||||||||||
| Total liabilities measured at fair value | $ | 813 | $ | 205 | $ | — | $ | 1,018 |
Long-term Debt. At December 24, 2023, the aggregate fair value of our outstanding fixed-rate notes, based on Level 2 inputs, was approximately $15.1 billion.
Marketable Securities. At December 24, 2023 and September 24, 2023, our marketable securities were all classified as current and were primarily comprised of available-for-sale debt securities (substantially all of which were corporate bonds and notes).
The contractual maturities of available-for-sale debt securities were as follows (in millions):
| December 24, 2023 | |||||
| Years to Maturity | |||||
| Less than one year | $ | 1,820 | |||
| One to five years | 1,678 | ||||
| Five to ten years | 7 | ||||
| No single maturity date | 280 | ||||
| Total | $ | 3,785 |
Debt securities with no single maturity date included mortgage- and asset-backed securities.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in “Part I, Item 1” of this Quarterly Report and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended September 24, 2023 contained in our 2023 Annual Report on Form 10-K.
This Quarterly Report (including but not limited to this section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “would” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. Additionally, statements concerning future matters such as our future business, prospects, results of operations or financial condition; research and development or technology investments; new or enhanced products, services or technologies; emerging industries or business models; design wins or product launches; industry, market or technology trends, dynamics or transitions; our expectations regarding future demand or supply conditions or macroeconomic factors; strategic investments or acquisitions, and the anticipated timing or benefits thereof; cost reduction initiatives, associated restructuring charges and the anticipated timing thereof; legal or regulatory matters; U.S./China trade or national security tensions; vertical integration by our customers; competition; annual effective tax rates; and other statements regarding matters that are not historical are also forward-looking statements.
Although forward-looking statements in this Quarterly Report reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading “Risk Factors” below, as well as those discussed elsewhere in this Quarterly Report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
First Quarter Fiscal 2024 Overview
Revenues for the first quarter of fiscal 2024 were $9.9 billion, an increase of 5% compared to the year ago quarter, with net income of $2.8 billion, an increase of 24% compared to the year ago quarter. Key items from the first quarter of fiscal 2024 included:
-
QCT revenues increased by 7% in the first quarter of fiscal 2024 compared to the year ago quarter, primarily due to higher handset and automotive revenues, partially offset by lower IoT revenues.
-
QTL revenues decreased by 4% in the first quarter of fiscal 2024 compared to the year ago quarter.
Our Business and Operating Segments
We develop and commercialize foundational technologies and products used in mobile devices and other wireless products. We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, including patents and other rights.
We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our cloud computing processing initiative.
Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns the vast majority of our patent portfolio. Substantially all of our products and services businesses, including QCT, and substantially all of our engineering and research and development functions are operated by Qualcomm Technologies, Inc. (QTI), a wholly-owned subsidiary of QUALCOMM Incorporated, and QTI’s subsidiaries. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents owned by QUALCOMM Incorporated.
Seasonality. Many of our products and much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand. Our revenues have historically fluctuated based on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles (such as the transition to the next generation of wireless technologies). This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when licensees’ sales occur. These trends may or may not continue in the future. Further, the trends for QTL have been, and may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings.
Results of Operations
| Revenues (in millions) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| December 24, 2023 | December 25, 2022 | Change | |||||||||||||||||||||||||||||||||
| Equipment and services | $ | 8,316 | $ | 7,784 | $ | 532 | |||||||||||||||||||||||||||||
| Licensing | 1,619 | 1,679 | (60) | ||||||||||||||||||||||||||||||||
| $ | 9,935 | $ | 9,463 | $ | 472 |
First quarter 2024 vs. 2023
The increase in revenues in the first quarter of fiscal 2024 was primarily due to:
+ $525 million in higher equipment and services revenues from our QCT segment
- $64 million in lower licensing revenues from our QTL segment
| Costs and Expenses (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| **December 24, 2 |
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial market risks related to interest rates, foreign currency exchange rates and equity prices are described in our 2023 Annual Report on Form 10-K. At December 24, 2023, there have been no material changes to the financial market risks described at September 24, 2023.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.
Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined under Rule 13a-15(f) promulgated under the Exchange Act, in the first quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information regarding certain legal proceedings is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”
Item 1A. RISK FACTORS
We have provided updated Risk Factors in the section labeled “Risk Factors” in “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We do not believe those updates have materially changed the type or magnitude of the risks we face in comparison to the disclosure provided in our 2023 Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Issuer Purchases of Equity Securities
Our purchases of our common stock in the first quarter of fiscal 2024 were:
| Total Number of Shares Purchased | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||||||||||||
| (In thousands) | (In thousands) | (In millions) | |||||||||||||||||||||
| September 25, 2023 to October 22, 2023 | 326 | $ | 110.53 | 326 | $ | 5,111 | |||||||||||||||||
| October 23, 2023 to November 19, 2023 | 2,714 | 114.21 | 2,714 | 4,801 | |||||||||||||||||||
| November 20, 2023 to December 24, 2023 | 3,330 | 131.41 | 3,330 | 4,363 | |||||||||||||||||||
| Total | 6,370 | 6,370 |
(1) Average Price Paid Per Share excludes cash paid for commissions.
(2) On October 12, 2021, we announced a $10.0 billion stock repurchase program. The stock repurchase program has no expiration date. Shares withheld to satisfy statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered stock repurchases under our stock repurchase program and, therefore, are excluded from the table above.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
On November 29, 2023, James H. Thompson, our Chief Technology Officer, Qualcomm Technologies, Inc., adopted a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K) providing for the sale of up to 72,000 shares of our common stock through November 8, 2024.
On December 7, 2023, Akash Palkhiwala, then our Chief Financial Officer (currently our Chief Financial Officer and Chief Operating Officer), adopted a Rule 10b5-1 trading arrangement providing for the sale of up to 40,000 shares of our common stock through February 28, 2025.
Item 6. EXHIBITS
(1)Indicates management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| QUALCOMM Incorporated | |||||
| Dated: January 31, 2024 | /s/ Akash Palkhiwala | ||||
| Akash Palkhiwala | |||||
| Chief Financial Officer and Chief Operating Officer |