QUALCOMM (QCOM) Q4 2026 Earnings Call Transcript

DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Senior Vice President of Investor Relations - Brett William Simpson
• President and Chief Executive Officer - Cristiano Renno Amon

TAKEAWAYS

• Non-GAAP Revenue -- $10.4 billion, reflecting sequential QCT revenue growth of 6% to reach the high end of management's guidance range.
• Non-GAAP EPS -- $2.17, compared to $3.00 in the prior-year period.
• QCT Automotive Revenue -- $2 billion, representing an 89% increase driven by the commercial ramp of fifth generation compute platforms.
• QCT Handset Revenue -- $5.1 billion, a 26% decline resulting from industry-wide memory dynamics and the transition of Apple product revenue.
• QCT IoT Revenue -- $1.9 billion, a 4% increase led by 20% growth in the industrial, networking, and robotics categories.
• QTL Revenue -- $1.3 billion, supported by the renewal of long-term licensing agreements with Apple, Huawei, and Transsion.
• Full-Year Non-GAAP Revenue -- $43.2 billion for fiscal 2026, compared to $44.1 billion in the previous fiscal year.
• First Quarter Revenue Guidance -- $10.4 billion to $11.2 billion, including the start of revenue generation from custom silicon in the data center segment.
• Data Center Revenue Target -- $5 billion for fiscal 2027, with management expecting the segment to exit the year at an annualized run rate of $7 billion.
• Non-Handset QCT Revenue Growth -- Projected at more than 60% in fiscal 2027 as the company executes on its diversification strategy.
• Automotive Annualized Run Rate -- $8 billion exiting fiscal 2026, which exceeded management's previous expectations of $7 billion.
• Design Win Pipeline -- Grew 70% year over year, reinforcing long-term revenue targets for automotive and data center segments.
• Amazon Potential Revenue Opportunity -- Up to $60 billion over 10 years, involving custom silicon for AI inference and optical connectivity.
• QCT Operating Margin Target -- Maintained at 30% long term, despite a 3 percentage point near-term impact from data center investments.
• StacyX 5G Deployment -- A multiyear agreement for a nationwide terrestrial 5G network in the U.S. with deployment scheduled to begin in 2027.
• Quarterly Stockholder Returns -- $2 billion, consisting of $1 billion in share repurchases and $1 billion in cash dividends.
• HPC Lab Performance -- 0.3 picojoules per bit, outperforming the design target of 0.5 picojoules per bit for power efficiency.
• Samsung Baseline Share -- Established at north of 70% for future Galaxy platforms, an increase from the historical 50% baseline.
• Data Center Q1 Revenue Guidance -- Greater than $650 million, driven by the commencement of shipments to two hyperscale customers.
• Agentic AI Smartphone Downloads -- Over 10 million downloads for Meta Muse within 40 days, indicating rapid adoption of AI agent features.
• Handset Market Outlook -- Anticipated to be flat to down in calendar 2027 following a projected low-teens to mid-teens decline in 2026.

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RISKS

• Cristiano Renno Amon stated, "Our plan assumes global handset units will remain flat to down in calendar 2027," following a low-teens to mid-teens market decline in 2026.
• Akash Palkhiwala warned that custom silicon engagements are expected to be dilutive to gross margins, even as they remain accretive to operating margins.

SUMMARY

QUALCOMM Incorporated (NASDAQ:QCOM) reported fourth quarter results that met the high end of revenue guidance, supported by significant growth in its automotive and internet of things (IoT) segments. Management stated that the company has completed key licensing renewals with major handset manufacturers, providing a stable foundation through the next licensing cycle beginning in fiscal 2030. The company is transitioning into a diversified semiconductor provider, with non-handset revenues projected to represent a majority of segment revenue in fiscal 2027. Management highlighted the upcoming scale of its data center business, driven by custom silicon engagements with major hyperscale customers and advancements in compute technology.

• Amon noted that leading AI companies are targeting smartphones by 2028 capable of running 100 billion parameter models locally with all-day battery life.
• The multiyear agreement with StacyX for a nationwide terrestrial 5G network is expected to be one of the largest 5G deployments in the United States.
• Amon stated, "the jury found ARM breached its long standing architecture license agreement ALA with Qualcomm," confirming no implications for the company's CPU road map.
• Management reported that the majority of the $5 billion fiscal 2027 data center revenue will be driven by two hyperscale customers, including Amazon.
• Optimization for Qualcomm accelerators is underway with Modular, which is delivering performance as an open multi-vendor stack.

INDUSTRY GLOSSARY

• ALA: Architecture License Agreement; the contract governing the use of Arm's processor architecture in custom silicon designs.
• Agentic AI: Artificial intelligence systems designed to act as proactive agents that perform complex tasks on behalf of users.
• HPC: High Bandwidth Compute; technology focused on optimizing the speed and efficiency of data transfer in high-performance processing environments.
• Massive MIMO: Multiple Input Multiple Output; a wireless technology that uses multiple antennas at the source and destination to increase network capacity.
• Snapdragon Digital Chassis: A suite of cloud-connected platforms for automotive connectivity, computing, and cockpit experiences.
• QCT: Qualcomm CDMA Technologies; the semiconductor division focused on wireless integrated circuits and software.
• QTL: Qualcomm Technology Licensing; the segment responsible for licensing the company's wireless patent portfolio.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm Fourth Quarter Fiscal 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. If you would like to ask a question during this time, press star, then the number 1 on your telephone keypad. If you are using speakerphone, please pick up your handset before pressing the numbers. Please limit your questions to 1 question and 1 follow-up. A reminder, this conference is being recorded November 4, 2026. Playback number for today's call is (877) 660-6.85 thousand. International callers, please dial (201) 612-7.42 thousand. The playback reservation number is 13.8 million.

I would now like to turn the call over to Brett William Simpson, Senior Vice President of Investor Relations. Mr. Simpson, please go ahead.

Brett William Simpson: Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Cristiano Renno Amon and Akash Palkhiwala. In addition, Alex Rogers will join the question and answer session. You can access our earnings release, and a slide presentation that accompany this call on our Investor Relations website. In addition, this call is being webcast on qualcomm.com and a replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward looking statements, including projections, and estimates of future events, business or industry trends or business or financial results.

Actual events or results, could differ materially from those projected in our forward looking statements. Please refer to our SEC filings including our most recent 10-K, which contain important factors that could cause actual results to differ materially from the forward looking statements. And now to comments from Qualcomm's President and Chief Executive Officer, Cristiano Renno Amon.

Cristiano Renno Amon: Thank you, Brett. Good afternoon everyone. In fiscal Q4, we delivered non-GAAP revenues of $10.4 billion and non-GAAP earnings per share of $2.17. QCT revenues of $9 billion up 6% sequentially were at the high end of our guidance. Licensing business revenues were $1.3 billion. For fiscal 26, reported non-GAAP revenues of $43.2 billion and QCT revenues of $37.2 billion highlighted by year over year revenue growth of 24% across combined automotive and IoT. We closed fiscal 26 with many of the uncertainties that have been weighing on our business now behind us. Specifically, QTL license renewals the loss of Apple as a customer and the negative impact of memory pricing on the size of the mobile industry.

Regarding the latter, the June quarter marked the low point for our China Android business and we have seen sequential growth this quarter. Going forward, our plan assumes global handset units will remain flat to down in calendar 2027. The timing and shape of the Apple modem transition is fully incorporated in how we are planning the business and its well understood at this point. We also renewed important QTL licensing agreements including Apple and Huawei. Now we enter fiscal 27 as a broader, more diversified Qualcomm with strong momentum and significant opportunities ahead. First, non handset revenues in QCT will grow by more than 60% year over year.

Second, our data center business begins its ramp with revenues expected to exceed $650 million in the December quarter. Third, automotive revenues reached an $8 billion annualized run rate exiting fiscal 21 billion ahead of expectations. Fourth, we established a solid foundation in how agentic AI transforms the edge and leads to new product categories for Qualcomm. And finally, we reach a landmark agreement with StacyX to power their nationwide terrestrial 5G network in the U.S. Our technology investments are aligned with the direction the industry is moving. We have made key acquisitions to build on our hardware and software capabilities as we evolve into a full stack semiconductor company.

We announced strategic agreements with industry leaders including Meta, Amazon, BMW, and Stellantis with more to come and our design win pipeline across the company grew 70% year over year. This is the backdrop that positions Qualcomm to deliver on our fiscal 39 targets of $40 billion in non handset revenues with over $15 billion coming from data center. Now, I will focus on the areas that are top of mind for investors. Let me start with licensing. Where we reached a milestone this quarter. We are extremely pleased with our renewals with Apple, Huawei and Transsion. These agreements provide stability for QTL as we move to the 6G era.

They also demonstrate the enduring value of our IP and patent portfolio. And just as in every prior generation, we expect our inventions to be foundational to 6G. Importantly, our QTL revenue run rate remains unchanged. The next renewal cycle begins in fiscal 2030 and runs through fiscal 2030. Licensing gives Qualcomm a durable highly profitable foundation as we scale our next set of growth opportunities. Data center is another area where we made considerable progress this quarter. it is 1 of our top strategic priorities and a major focus of my own time, as we build this business around long term customer relationships a broad product portfolio in an open software ecosystem. AWS is a good example.

Our agreement spans multiple product generations across custom silicon for AI inference and optical connectivity. Custom accelerators began shipping in October in our connectivity solutions with AWS ramp later this month. We also secure a second optical connectivity customer. With Qualcomm high bandwidth compute, our AI250 silicon is exceeding our expectations for power efficiency and bandwidth and early yields are on track. These results are generating significant interest from AI customers and memory partners and we added 2 major prospects in the quarter. Our Oryon C1 thousand CPU remains on track to ship to Meta as scheduled and we engage with a large new potential customer.

We are optimistic about the opportunities we have today with our high speed connectivity solutions such as optical DSPs, and we are investing in bringing optics directly alongside our XPUs and custom silicon as we demonstrated with Lumentin and Corning at ECOC 2026. In software, our full stack integration with modular is progressing well. Modular is delivering impressive performance as an open multi vendor stack running on NVIDIA and AMD GPUs Amazon Traneon and Google TPU. Optimization for Qualcomm accelerators is also underway. Last month, Modular made the full MAX source code available and this builds on open sourcing the module language in August.

We are also excited that modular cloud went live during the September quarter and is already processing tens of trillions of tokens per month. We will share more details soon about how our ecosystem partners are using cloud. Our data center business is off to a strong start. We are reiterating our $5 billion revenue target for fiscal 2027 with healthy order coverage supporting continued revenue growth in fiscal 28. In automotive, we exit fiscal 26 at an annualized revenue run rate of approximately $8 billion well above the $7 billion expectations we provided last quarter. Additionally, fiscal fourth quarter automotive revenue grew nearly 90% year over year.

Commercial shipments of our fifth generation Snapdragon digital chassis began in the September quarter and will continue to ramp in fiscal 27. As a reminder, this platform is our most advanced to date delivering a significant increase in performance and represents our largest generation to generation content increase in Qualcomm's history. Our products also evolve from SoCs to integrated compute modules. Customer demand remains strong across our portfolio and Qualcomm is positioned to become 1 of the largest automotive semiconductor suppliers by revenue in fiscal 27. In robotics, our premium tier 10 is set to begin its commercial ramp and continues to generate strong customer momentum.

During the quarter, ecosystem partners demonstrated AI models of up to 80 billion parameters running directly on IQ10. In fiscal 27, we will continue to expand the technologies and capabilities across our robotics platform. As we anticipated, the proliferation and capability of AI agents is increasing rapidly and we are seeing growing consumer adoption as a result. A prime example is Meta Muse, which reached over 10 million downloads in just 40 days. We are also seeing more companies designing experiences and devices around agents. This includes Agentic smartphones, smart glasses, and other new personal AI form factors.

Meta's Audio AI glasses, Muse Charm, Gemini Eyewear, and Alibaba's Quinn AI glasses are recent examples of intelligent wearables with more to come over the next year. The smartphone is an essential device for agentic experiences as it is the device that knows people best. it is always with them has their contacts, preferences, and permissions. The device is also evolving to simultaneously support what the user is doing and what agents are doing on the user's behalf. Delivering these experiences will require greater computing performance power efficiency and connectivity, which play directly to Qualcomm's strengths.

More of our customers are already building Agentic features into their flagship devices and we are pleased to share that the world's first Agentic smartphones were launched on Snapdragon. Heading into fiscal 2027, we are pleased with our premium tier Android share position and we expect it to strengthen as the transition to Agentic smartphones drive an increase in computing content per device. For perspective, leading AI companies are targeting smartphones by 2028 capable of running 100 billion parameter models locally with an all day battery life. Reaching this goal will require a step function change in on device compute performance.

Finally, I am very proud to share that StacyX selected Qualcomm to power Starlink Mobile's nationwide terrestrial 5G network in the U.S. Starlink is building 1 of the most ambitious new cellular networks in the country and our Dragonwing infrastructure platforms will bring together advanced massive MIMO purpose built RAN processing and commercial grade layer 1 software. Under a multiyear agreement, deployment begins in 2027 and is expected to be 1 of the largest 5G deployments in the United States. Together, we have an opportunity to advance United States wireless leadership starting with 5G and the convergence of satellite and terrestrial connectivity. This new architecture establishes a foundation for next generation connectivity and network intelligence.

This is a significant win for our infrastructure business in the beginning of a strategic relationship with tremendous potential. Before I close, I would like to briefly address our litigation with ARM. We are gratified that the jury found ARM breached its long standing architecture license agreement ALA with Qualcomm. Failed to honor its commitments. Intentionally acted to disrupt Qualcomm's business and engage in unfair competition both as a supplier and a competitor. Together with Qualcomm's prior court victory, this outcome further exposes Arm's intentions to harm Qualcomm and its ecosystem. This outcome is a victory for innovation and competition.

And we remain focused on developing and delivering industry leading semiconductor products, including our Oryon CPUs to customers and consumers worldwide from mobile, to data center. In summary, we enter fiscal 27 having made important progress against the ambitious growth plan we outlined at Investor Day. Since then, we have signed major strategic agreements and position our data center business to ramp at scale. We remain focused on execution as we build the next chapter for Qualcomm and we are confident in delivering on our fiscal 29 targets. With that, I will turn it over to Akash.

Akash Palkhiwala: Thank you, Cristiano, and good afternoon, everyone. Let me begin with our results for the fourth fiscal quarter. We delivered non-GAAP revenues of $10.4 billion and EPS of $2.17 revenues at the high end of our guidance. QTL revenues of $1.3 billion and EBITDA margin of 70% were in line with our expectations. QCT revenues of $9 billion were at the high end of our guidance and EBT margin of 24% was in line with expectations. QCT handset revenues of $5.1 billion reflected the impact of industry wide memory dynamics on the global smartphone market. In QCT automotive, we delivered our first $2 billion revenue quarter, with 89% year over year growth.

Driven by the growing adoption of integrated module products, for our fifth generation compute platforms. QCT IoT revenues of $1.9 billion were up 4% year over year led by our industrial, networking, and robotics category of products. Which grew 20% versus the year ago period. Offset by the impact of memory constraints on consumer products. Total non handset revenues in QCT, including automotive and IoT, grew 36% year over year underscoring the continued execution of our growth initiatives. Lastly, we returned $2 billion to stockholders including $1 billion each in share repurchases and dividends. Before turning to guidance, I would like to provide an update on a couple of factors reflected in our financial performance.

First, QTL, we have now completed long term license agreements with Apple, Huawei, and Transsion. And do not have any upcoming license renewals with major handset OEMs for the next several years. Following these agreements, QTL revenue run rate and long term revenue forecast remains unchanged. Second, we outlined last quarter, implementing price increases across our products to reflect the higher semiconductor input costs. We expect the full benefit of these actions to be reflected in QCT gross margins in the second half of fiscal 27. Finally, we are excited that fiscal 27 marks an important milestone for our data center business as we transition from customer engagements to revenue generation.

Our first fiscal quarter guidance reflects the commencement of shipments to 2 hyperscaler customers for custom silicon engagement. As we have discussed previously, we expect these custom silicon engagements to be accretive to QCT operating margins. But dilutive to gross margins. These factors are reflected in our fourth quarter performance and first quarter outlook. I will now provide our guidance for the first fiscal quarter. We are forecasting revenues of $10.4 billion to $11.2 billion and non-GAAP EPS of $2.15 to $2.35. In QTL, we estimate revenues of $1.3 billion to $1.5 billion and EBT margins of 72% to 76%, reflecting normal seasonal trends.

In QCT, we expect revenues of $9 billion to $9.6 billion and EBT margins of 20% to 22%. Please note that QCT EBT margin guidance includes an impact of 3 percentage points due to the addition of data center in the QCT segment starting in fiscal 27 and reflects investments for AI accelerator and CPU platforms ahead of revenue ramp. Importantly, this segmentation change has no impact on total company guidance or on our long term QCT EBT margin target of 30%. We forecast QCT handset revenues to decline by a mid single digit percentage sequentially as growth in Android revenues is offset by the continued ramp down in Apple product revenue.

QCT data center, we expect revenues of greater than $650 million driven by commencement of shipments to custom silicon customers. We expect combined QCT automotive and IoT revenues to be approximately flat sequentially. Lastly, we anticipate non-GAAP operating expenses to be approximately $2.8 billion in the quarter. Before I conclude my prepared remarks, I would like to outline the progress the execution of our growth strategy. In fiscal 27, we expect to achieve 2 key milestones in revenue diversification. First, non handset revenues in QCT across automotive, IoT, and data center will grow by greater than 60% on a year over year basis starting in the first fiscal quarter.

Second, non handset revenues will represent more than 50% of QCT revenues in the fiscal year. In data center, we are executing to the revenue targets we outlined at Investor Day including $5 billion in fiscal 27 and $15 billion in fiscal 29. We expect data center revenues to scale throughout fiscal 27, exiting the year at a $7 billion run rate. We are also expanding our customer engagement pipeline across additional global hyperscalers, including the long term strategic agreement with Amazon Web Services. With a potential revenue opportunity of up to $60 billion over the next 10 years.

During the quarter, we also successfully validated our high bandwidth compute technology in lab trials, marking a key milestone in delivering an innovative AI inference accelerator solution designed to address the memory bandwidth challenge in data centers. We are also well positioned to lead other key industry trends including the transition to Agentic AI in consumer devices, and the adoption of physical AI across automotive, industrial, and robotics. Finally, we would like to thank our employees for their exceptional execution and innovation throughout fiscal 26. Their commitment enables us to deliver industry leading products to customers around the world. This concludes our prepared remarks. Back to you, Brett.

Brett William Simpson: Thank you, Akash. Operator, we are now ready for questions.

Operator: Thank you. The first question comes from the line of Joshua Buchalter with TD Cowen. Proceed with your question.

Joshua Buchalter: Hey, guys. Thank you for taking my question. Maybe to start, I mean, last quarter, you guys kind of telegraphed the gross margin step down that was expected from the ASIC business starting to ramp. How should we think about it through the rest of the year though? Because, you know, just a simple math of having to get to your $7 billion run rate exiting the year implies the data center business should grow close to 3x Like should we expect gross margins to continue to trend down through the year as a result of the larger data center business with this being the year where custom silicon is ramping aggressively? Thank you.

Akash Palkhiwala: Hi, Joshua. it is Akash. So let me kind of frame the overall gross margin framework for the company. As you know, we mentioned this last quarter, we are implementing price increases to reflect the higher semiconductor cost across the industry. And so we start realizing the benefit of that in our second fiscal quarter. And we will see the full benefit of that show up in second half of 27. So the way it plays out is as these price increases come into effect, our baseline gross margin goes back to our historical range of 40 to 50% at the low end of that range.

And then separately, on your question on data center, we, as we said previously, we expect that to be something that is accretive our operating margins, but dilutive to gross margins. And so that calibrates the gross margin down from the frame. Framework I just outlined. So that is no different than what we told you last quarter, and we are executing on the plan.

Joshua Buchalter: Thank you for the color there, Akash. And then maybe for my follow-up, it is good to see the HBC demos that you outlined, earlier this week. Can you maybe speak to what type of workloads you are seeing the traction for your accelerator parts initially? And then any updates on the commercial traction as we think about that I think I believe that is supposed to start contributing and ramping in the fiscal second half of this year, which is kind of only a couple of quarters away at this point. Thank you.

Cristiano Renno Amon: Thanks, Joshua. This is Cristiano. Look, we are very happy with, the progress we are making in HPC. We are actually doing better than what we said in Investor Day. We had a target on the design to about 0.5 picojoules per bit. We are doing better in the lab. We are doing about 0.3. Yield is exceeding our expectations. So we are very happy with the technology, progress. The main workloads that we are getting a lot of traction, it is incredibly, efficient for decode. So decode is where we are getting a lot of the, the positive feedback. We are engaged with customer. It changes the conversation when you have a PowerPoint to when you have silicon.

And I think that continues to build confidence in the projections we have not only for our custom ASIC but for merchant solutions coming up. As we think about 2029 targets. What is also interesting is now become part of the conversation of custom silicon with HPC, combining our HPC with some of our customer accelerators. So I would just say customer engagement is very positive.

Operator: The next question is from the line of Joseph Cardoso with JPMorgan. Please proceed with your questions.

Joseph Cardoso: Thanks for that. Question here and maybe just wanted to start off first with happy for you guys to give us the disclosure around how to think about the data center revenue ramp through the year. Maybe can you just provide a little bit more color on how you are thinking about your customers and how they get paced into that revenue ramp to the year itself. Maybe the second aspect there too is, I think in the past you have talked about 2 customers. So can you provide any color on the third customer here that is mentioned in the slide deck?

How you are thinking about that getting intertwined in the guidance that you provided for this year? the third customer ramp and at another plant? Then I do have a follow-up. Thank you.

Akash Palkhiwala: Okay. Joseph, this is Akash. So let me address the financials and then Cristiano will comment on top on customer ramp. So for fiscal 27, we are looking at $5 billion revenue forecast that we previously provided. We are guiding greater than $650 million in the first quarter. And we expect this revenue to ramp throughout the year as we go through the quarters. We will exit the year at approximately $7 billion exit rate, going into 2028. And so very happy with that. We will. We are very well positioned from a supply perspective to execute on the $5 billion target. And really, we expect to be constrained by supply rather than demand for upsides beyond the $5 billion.

When you look at fiscal 28, we are looking at a $7 billion starting point. The customers that we have in 2027 will extend to 28 as well and it gives us really strong design win coverage. Deliver very strong year over year growth. In fiscal 28 as well. And then as you know, we have set a target of 15 billion for 2029. Which, the customer engagement that Cristiano will outline right after this will position us very well to have a very high coverage of that number as well.

Cristiano Renno Amon: Just real quick, Joseph, on the customer. The majority of the $5 billion in fiscal 27 come from the 2 hyperscaler customers, so 1 of them being Amazon. I think the details of those were made public on the custom silicon plus connectivity. We do have another customer on the accelerator and in an advanced discussion also on subsequent custom silicon that is part of the ramp towards 2028, 2029. And we had said in the script, I think, we are. We have new prospects, especially on the CPU as well, I think, beyond meta, and we are working with the customers.

Joseph Cardoso: Got it. Appreciate the color there. And then maybe just wanted to double click on how you guys were framing handset revenue kind of exiting the year. And into next year? Specifically, how are you guys thinking about the growth here in terms of pricing layering on? I know it sounds like you are not expecting that to be in the period or kinda tranche here over the subsequent quarters. But any more color you can help us think about how that pricing ends up influencing kind of the numbers here and the magnitude that we should be thinking about.

And then as a second question, just bigger picture, you know, obviously, when we look at the market data points on the handset market, it does seem like a contraction on kind of the memory prices has been something we have been witnessing through this year. Just any early thoughts on how you are thinking about the health of the market going into next year, would appreciate it. Thank you.

Akash Palkhiwala: Yeah. Joseph, when you look at the overall handset 25 to 26, as like other industry analysts, are projecting a low teens to mid teens decline in the market. And then as we go into 27, we are thinking flat to slightly down the handset market. And that is how we have always projected our business based on that assumption, and it is playing out consistent with expectations. Specifically for QCT handset revenue in Android, As you will recall, we called the June quarter the bottom. For QCT handset revenues and Android in China. What has happened since is we have seen revenue grow into September and December quarter.

And so we are encouraged to see that, see that we have been conservative in our planning, and it is playing out exactly as we would expected.

Operator: The next question is from the line of Joe Moore with Morgan Stanley. Please proceed with your questions.

Joseph Moore: Brett. Thank you. In terms of the royalty rate, you sort of said that revenue run rate of QTL is unchanged. That the rate per device kind of similar as you look at these new contracts that you signed? Is there any change there? Because I assume that is right, but I just want to make sure.

Alexander H. Rogers: Yeah, Joe. Joe, you should-- we obviously do not specifically talk about the details of the contract, the confidential, but the. We are indicating that the revenue run rate remains the same. Which you should take it as we were able to hold the rate and the royalties as we renewed the contracts.

Joseph Moore: Brett. that is helpful. And then separately, on the Amazon deal, the warrant structure that you have there, you view that as kind of the model for approaching other customers? Do you expect to have those types of warrant arrangements? Or is that unique to that specific relationship?

Akash Palkhiwala: Well, if you look at our general set of engagements across data center, the engagements are very traditional, normal kind of customer engagements in the semiconductor industry. The Amazon warrant structure is the exception And as you know, the warrants that we issued were at the money warrants. So that is that is the only exception that we have at this point. And I think as we consider data center engagements going forward, we will we will look at other structures on a deal by deal basis, but you should think of our framework as being aligned with the traditional semiconductor model.

Operator: The next question is from the line of Timothy Arcuri with UBS. Please proceed with your questions.

Timothy Arcuri: Thanks a lot. Akash, I was wondering if you can provide a little bit of maybe outlook into March. I know that you do not want to guide March, but I think last call you thought that revenue would be up a little bit in March. You have easy comps for Apple into March. You know, Android should be a little better. So can you just give us kind of just a, you know, sense on, March would be great. Thanks.

Akash Palkhiwala: Yeah. Timothy, you are right. We are not guiding much at this point. But let me make a few comments on the year that, I hope are helpful. The first is, you know, typically in previous years, December has been our strongest quarter in the year. Now with Apple product revenue ramp down, we do not expect December to be the high quarter for us. When you look at data center revenue, we have talked about greater than 150 million in the first quarter. But we expect that to ramp as we go through the year. So that kinda defines our quarterly profile to some extent.

The third is when you look at 2026 to 2027, we expect auto IoT plus data center and non handset revenue to grow by greater than 60%. So this revenue would more than offset the decline in Apple product revenue. And then I think if you look at fiscal 27, we expect handset now to be less than 50% of our total revenue. And so obviously, that is a key milestone for our plan, and so we are happy to achieve that this year.

Timothy Arcuri: Got it. So you do not wanna. Is that because last call you did sort of say that March would be up. I guess you do not wanna commit that now?

Akash Palkhiwala: Yeah. I think it is the reasonable framework that I think the way people have looked at the business is a reasonable way of looking at it.

Timothy Arcuri: Thank you.

Operator: Our next question is from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

Stacy Rasgon: Hi, guys. Thanks for taking my questions. I wanted to dig into your handset market outlook a little bit. I am a little surprised still with the outlook for flat, especially given where we seem to be running at the end of the year, we are probably down more than 20% year over year in truth here, and things do not look better almost all that great in Q4. You also said your own China Android revenues were actually starting to grow in, I guess, June or September and December. You are also doing price increases.

Like how do you know in the context of everything that is going on that is just not pre-buys in front of the price increases in Android? I am just struggling a little bit with the handset outlook. Any further you could give on that would be super helpful for me.

Akash Palkhiwala: Sure, Stacy. So let me break it down into 2 parts. Let's talk about the market and then separately talk about QCT product revenue within Android. Overall market, as I said earlier, our view is that for 2025 to 2026, it is down low to mid teens. And then 2026 to 2027, we are projecting flat to down for the total market. So we think that is a prudent assumption as we plan given the uncertainty, overall in the environment. So Specifically on QCT revenue, as you will recall, the impact we saw in 2026 was not just from the change in the market, but also channel inventory drawdown. By OEMs.

And we do not expect that impact in 2027 because we have been following channel inventory. As you know, we get QTL information as well that we can check against. And so the channel inventory continues to be thin. And so we expect kinda QCT revenue really to be aligned with the overall market. And that is how we are projecting it going forward.

Cristiano Renno Amon: Maybe, Stacy, Cristiano, just to add another thing. 1 of the things we had said before, and I. And that is kind of because of our term partnerships that we have with our customers. A lot of the price increases, the reason that they have a delta versus the cost increase, and we talk about prices become more effective in the numbers in the second half, we have kind of been pricing newer platforms, new phones. So less subject to, pre-buying effect. And as Akash said, I think based on the data we are seeing in the market, June remained I think, the bottom, I think, for China Android.

Stacy Rasgon: If I could ask 1 follow-up, please. You talked about Samsung market share framework 75%. Is that still the framework share you have in mind for your share with them in their next generation, platform, that ramps in 2027?

Cristiano Renno Amon: Yeah. Absolutely. So here's how we think about the Samsung business, and here's a simple way to we have-- If you think about our business in the past, the baseline was 50%. This baseline is no longer 50%. it is north of 70%, as we have been doing. When you think about future generations of Galaxy. This is how we plan our business and I encourage all of you to plan the same way. that is the new baseline with Samsung. Other thing with Samsung is we are expanding the business. So traditionally, we were not the main supplier. All of their wearables and other devices, and you started to see that, associated with the premium Galaxy design as well.

Operator: Our next question is from the line of Benjamin Reitzes with Melius Research. Please proceed with your questions.

Benjamin Reitzes: Switching my question because Stacy just asked on the Samsung. So I wanted to ask about automotive. With regard to the beat in the quarter versus expectations. I know you are talking about IoT, automotive and data center all growing 60% for the year. But specifically in automotive, it is particularly strong versus expectations. And you are increasing some prices that you mentioned Is there a chance that there was pre-buying there in the automotive segment? Or do you feel like this kind of performance is sustainable throughout the year? Then I have a follow-up.

Cristiano Renno Amon: Thanks. No, very good. Thank you for the question. Look, we have been saying, I believe we have said that last quarter about the transition of our fifth generation platform. Just to give an idea, for cars that you see now on the road that, with Ford third generation platform, the silicon content increase versus the fifth generation is 8x. there is a lot more a lot more compute content. Into the automotive and most of our automotive growth is really share where the design win pipeline translates into revenue. that is where we are starting to see step function increases on the SoC revenue and that will continue.

Benjamin Reitzes: Okay, thanks. And then Akash, with regard to the EBIT margins, the EBT margins, for QCT, how's that going to progress throughout the year from the 20% to 22% that you guided for given the mix shift towards data center. I was a little unclear there. Is how should we model that as we go throughout the year? Thank you.

Akash Palkhiwala: Yep. Benjamin, so maybe it is a good opportunity to clarify that 1 of the changes we have made in the way we segment the businesses, QCT now includes data center. In 2026, it was outside the QCT segment. And just that change kind of reduces QCT gross margin operating margin by 3%, as, of course, we are investing ahead of revenue in a couple product lines. It does not change the overall Qualcomm numbers. it is just a change within segments that is included now in the QCT numbers. We are, of course, not guiding for years for operating margins, but you should think of it as our operating margin target QCT does not change.

We are still looking at a target of 30%. And as revenue starts scaling, across the next 2 to 3 years, we are confident in our ability to achieve it.

Operator: The next question is from the line of Vivek Arya with Bank of America. Please proceed with your question.

Liam Pharr: Hi. This is Liam Pharr on for Vivek. Thanks for taking my question. On networking interconnects, you mentioned the AWS optical ramp and a second optical connectivity customer. Could you help us size how large connectivity is today and how you see it growing into fiscal 27 and 2028 as you move to 24 gig and 1.6T. And does the ongoing consolidation in the optical interconnect space impact you in any way Do you see any natural synergies between interconnects and lasers from an ownership standpoint? Thank you.

Cristiano Renno Amon: Very good. Actually, thank you so much for your question. I really appreciate that. So we are not breaking that down, but you should assume that there is interconnect connectivity revenue within the 15 billion that we talked about and some of the $5 billion that we talk about in data center, $5 billion in 2027, $15 billion in 2029. We have been very optimistic about this. We have been investing This asset came to Qualcomm from the Alphawave acquisition. I think Qualcomm is probably a natural place for comms and we have been investing into this. We have very interesting, you know, technology demonstrations of progress with optical and co packaged optics.

In the quarter in the 2026 ECOC in Europe. We actually did, the demonstration with Lumentum. And you bring a good point. I think the structure of the industry is going to change. My analogy is what happened on RF front end. And that creates opportunity. So we have been engaged in very interesting conversations with some of the laser companies, especially as different forms of partnerships and strategic partnerships are going to be formed. This is actually a very exciting opportunity for us. And you are going to see over time a lot more products from Qualcomm on optics. And we have been working on the road map that we outlined in 400 gig, 800, and 1.6T. Thank you.

Liam Pharr: And then on the Dragonfly CPU, you mentioned new prospects beyond Meta. Should we think about the relative upside in CPUs relative to customer accelerators? With the ARM remedies phase still pending, does the outcome have any implications for CPU roadmap or cost structure? Thank you.

Cristiano Renno Amon: So let me break that question in 2. No implications on our CPU road map. I think we have been very clear about where we are with the ARM trial. We were actually very happy and with our ability to continue to develop and ship Orion products. I will look at that as probably upside in the projections that we made on 5 and 15, we just had Meta as a customer. Any new customer above that is an upside to the revenue target.

Operator: The next question is from the line of Jim Schneider with Goldman Sachs. Please proceed with your questions.

Jim Schneider: Good afternoon. Thanks for taking my question. Was wondering if you can maybe just kind of clarify relative to the 3 distinct hyperscale customers that you are ramping through fiscal 27, will all 3 of those be at some kind of revenue materiality exiting the year? Or will it just be maybe 2 of them and 1 will kind of fall outside the year? Thank you.

Akash Palkhiwala: Yeah. You should think of 2 of those customers at very significant scale, making up that $5 billion, and they will extend into fiscal 28 and then 2029 as well. So it is a. Think of it as a long term, multi generation, multiproduct relationship. And both the relationships are at scale.

Jim Schneider: Thank you. And then as we model fiscal 27, you provide some helpful overall EBIT margin commentary in terms of the profile of the year. But is there any way to think about OpEx since is there any kind of material OpEx step up that we should be thinking about during the course of fiscal 27?

Akash Palkhiwala: Yeah. I think you should just, think of our OpEx approach as consistent over the last year. We are guiding 2.8 billion for the first quarter. And the focus on OpEx is really kind of bringing in new skills that do not exist in the company as we diversify, especially within data center. And that will continue to be the focus area for us going forward. Just maybe 1 timing thing is just that we typically have calendar year employee. Employee related expenses reset. When we get to January, so that will happen. But that is kind of consistent with previous years that you have seen.

Jim Schneider: Thank you.

Operator: Our final question is from the line of Christopher Caso with Wolfe Research. Please proceed with your questions.

Christopher Caso: Yes, good evening. I guess first question is with regard to the Starlink announcement you made this morning. Could you give some more color on that in terms of timing, magnitude and what Qualcomm is providing into that venture?

Cristiano Renno Amon: Yes. Thanks for the question, Christopher. Timing, I think we talked about 2027. You should think about from a financial standpoint, it will start to appear as we exit fiscal 27. it is more of a fiscal 2028 from a revenue standpoint. From a magnitude, I think the what we can say at this point, and I think it is probably how we both articulated into announcement, is a nationwide network in the United States and probably 1 of the largest build out of a network. it is a terrestrial network. We provide, silicon, content for radio, including massive MIMO.

So as well as the accelerator, for the digital unit, and we provide software on the layer 1. it is a great partnership with, StacyX, for next generation, I think, infrastructure. The industry has been running on dedicated equipment. I think we have seen a lot of trends at technology ranging from open RAN to AI native as an opportunity to innovate in this space. And as we talk about it, it is a multiyear agreement and, including how we are gonna be thinking about the generation of wireless as well. We are very proud of this announcement.

I think it is, it is great also from the United States technology leadership standpoint, and, we are going to be executing on it. Back to you, Brett.

Christopher Caso: As a follow-up question, I wonder if you could give some color and I know you talked a bit about this in the Analyst Day, but in terms of what product categories are in the data center revenue in the 5 billion in fiscal 27 and when other products layer in. And, you know, obviously, for near term for this year, is it all connectivity revenue? Is there. Assuming that there is no accelerator revenue, in the numbers for the $5 billion that comes in 2027?

Akash Palkhiwala: Christopher, so for the 5 billion in 2027, most of that revenue is actually custom silicon engagement for the main AI accelerator. At our 2 hyperscaler customers. The next category that is material in the 5 billion is the connectivity revenue. So you should think of those as driving the f y 2027 revenue ramp. When you think about the 15 billion revenue in 2029, that will be inclusive of the customer silicon engagement, expansion in connectivity, but then we will also have a CPU and AI accelerator both coming in. And that is why we feel confident about achieving the 15 billion and really going beyond that.

As we execute on the product road map, given how good our technology is looking and the interest that we are seeing from various hyperscalers.

Christopher Caso: Thank you.

Operator: That concludes today's question and answer session. Cristiano, do you have anything further to add before adjourning the call?

Cristiano Renno Amon: No. I just wanted to thank our employees and our partners As I said in my prepared remarks, this is an important, I think, close of a fiscal year for Qualcomm. And it really positioned us to start fiscal 27, with all of the things are within our control and, focus on growing in a much more diverse company. We are very excited about that. We have a lot of things we are doing in parallel, but I guess we develop that capability as we diversify the company, and we are excited about our future. Thank you.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

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