QCOM's Q4 2025 Revenue Rises 14% Amid Strong Handset and IoT Performance

Qualcomm (QCOM.US) reported a 14% increase in revenues to $44.3 billion for fiscal year 2025, compared to $39.0 billion in fiscal year 2024. Despite the revenue growth, net income decreased by 45% to $5.5 billion from $10.1 billion in the prior year, primarily due to a $5.7 billion charge to income tax expense. The company's diluted EPS for continuing operations was $5.01, falling short of the analyst estimate of $2.87. The reporting period covers the fiscal year ended September 28, 2025.

Strong Segment Performance

The Qualcomm CDMA Technologies (QCT) segment drove much of the revenue growth, with a 16% increase in fiscal 2025. This was primarily attributed to higher handset revenues, which saw a $2.5 billion increase per chipset due to higher average selling prices and a favorable product mix. This growth was further bolstered by $423 million in increased chipset shipments by major OEMs, benefiting from rising demand for premium-tier Snapdragon platforms in Android devices.

The Internet of Things (IoT) segment also contributed significantly, with revenues increasing by $1.5 billion driven by higher shipments across edge networking, consumer, and industrial products. Automotive revenues showed substantial growth as well, primarily due to increased shipments from new vehicle launches incorporating Snapdragon digital cockpit products.

Impact of Tax Reform and Licensing Activities

A significant factor impacting QCOM's net income was a $5.7 billion charge to income tax expense in the fourth quarter of fiscal 2025. This charge was necessary to establish a valuation allowance against federal deferred tax assets, following the enactment of the One Big Beautiful Bill Act (OBBB) on July 4, 2025, which introduced corporate tax reforms including the Corporate Alternative Minimum Tax (CAMT) beginning in fiscal 2026. This legislative change led to the company no longer expecting to realize substantially all of its existing federal deferred tax assets.

The Qualcomm Technology Licensing (QTL) segment's revenues remained approximately flat in fiscal 2025. This was influenced by the execution of new long-term licenses with two key Chinese OEMs and new 4G and 5G license agreements with Transsion. However, QTL revenues no longer included royalties from Huawei, as their license agreement expired in the second quarter of fiscal 2025.

Management Outlook and Market Trends

Management anticipates that on-device AI and high-performance, low-power computing, combined with cellular technology like 5G, will continue to drive adoption of QCOM's technologies in industries beyond mobile handsets, such as automotive and IoT. The company plans to continue investing in key growth and diversification initiatives, including increased share-based compensation expense to motivate and retain talent for its long-term diversification strategy.

However, QCOM expects continued intense competition, including from vertical integration by customers like Apple and Samsung, which may increasingly use their own modem products. This could negatively impact QCT revenues. Geopolitical tensions, particularly between the U.S. and China, and changes in global trade policies are also noted as potential risks that could affect demand, pricing, and costs, adding uncertainty to future customer demand and potentially impacting financial results.