Smartphone chipmaker Qualcomm Inc. sprung a surprise today, posting second-quarter results that easily beat expectations despite seeing much lower demand for smartphone chips because of the coronavirus pandemic.

The company reported a profit before certain costs such as stock compensation of 88 cents per share on revenue of $5.2 billion. That was well ahead of Wall Street’s forecast of earnings of 78 cents per share on revenue of $5.02 billion.

The strong quarter was all the more impressive because Qualcomm said demand for smartphones fell by 21% in the quarter from a year ago. The company also warned that it’s expecting lower demand for smartphones in the next quarter because of the COVID-19 pandemic.

Qualcomm’s CDA Technologies business unit, which is its largest, saw revenue jump 10% from a year ago, to $4.1 billion. Meanwhile, Qualcomm Technology Licensing, the unit responsible for licensing the company’s patented technologies, saw its revenue decline 4% year-over-year, to $1.07 billion.

“We executed extremely well in the second fiscal quarter, with strong non-GAAP results in line with our guidance, demonstrating the strength of our business model and the resilience of our team to respond quickly to the unique challenges presented by the global pandemic,” Qualcomm Chief Executive Officer Steve Mollenkopf (pictured) said in prepared remarks.

Qualcomm may have surpassed expectations, but what really seems to have gotten investors excited is the company’s optimistic guidance for the next three months. For the third quarter, it forecast earnings in the range of 60 to 80 cents per share on revenue of between $4.4 billion and $5.2 billion. Wall Street said it’s expecting earnings of 75 cents per share on revenue of $4.89 billion.

The company said its guidance assumes there will be a 30% drop in demand for smartphone handsets compared with previous expectations for the third quarter. That estimate is based on the rate of economic recovery seen in China, officials said.

Investors were seemingly encouraged by the outlook, as Qualcomm’s stock rose more than 3% in after-hours trading.

Qualcomm is the world’s leading maker of 5G smartphone chips and sells a lot of patents related to that technology, so its financial performance helps to shed some light on the status of 5G’s global rollout. And Mollenkopf surprised analysts when he said the company is still expecting about 175 million to 225 million 5G phones to ship during this year, a forecast that remains unchanged from earlier this year.

“Overall, 5G is progressing as planned,” Mollenkopf said in a call with analysts. The CEO added that Qualcomm’s customers, which include Apple Inc., are likely to stick to their previous 5G phone launch schedules.

“There’s been a lot of intensity to maintain those schedules,” Mollenkopf said. “My guess is you’ll see things move around a little bit because of people dealing with the environment they’re dealing with. But in general, I don’t think you’re going to see big changes in that.”

Analyst Patrick Moorhead of Moor Insights & Strategy said Qualcomm delivered a better-than-expected second quarter.

“The biggest surprise, however, is that the company is sticking to its annual 5G handset unit forecast of 175 million to 225 million units,” Moorhead said. “These are very profitable for the company. This is a very good sign as it indicates business as usual for 5G handsets.”

Photo: Fortune Brainstorm TECH/Flickr