Smartphone chip giant Qualcomm Inc. delivered a blowout quarter today with earnings and revenue that easily beat Wall Street’s expectations combined with triple-digit operating income growth.

The company reported a second-quarter profit before certain costs such as stock compensation of $1.90 per share on revenue of $7.94 billion, up 52% from a year ago. Wall Street had been looking for a profit of $1.67 per share on revenue of $7.6 billion.

The report sent Qualcomm’s stock up 5% in after-hours trading.

Qualcomm Chief Executive Steve Mollenkopf, who will step down from the role on June 30, said the strong results were “driven by sustained demand for smartphones globally and our ability to increase the scale of our non-handset revenues.”

The lion’s share of Qualcomm’s income is derived from smartphone handset chips, and the company has previously said the global rollout of 5G networks presents a big growth opportunity for it, all the more so as nations emerge from COVID-19-related lockdowns and people begin to travel more.

Qualcomm’s CDMA Technologies business, which includes chips for handsets as well as radio frequency front-end, “internet of things” and automotive components, raked in $6.28 billion in sales, beating Wall Street’s consensus of $6.26 billion. Within that segment, handset revenue came to $4.07 billion, up 53% from the same period a year ago but below Wall Street’s forecast of $4.23 billion.

The company’s other main business, Qualcomm Technology Licensing, which covers its mobile technology patent royalties, reported $1.61 billion in revenue, up 51% from a year ago.

Analyst Patrick Moorhead of Moor Insights & Strategy said Qualcomm delivered a “monster quarter.” He was especially impressed with its 256% operating income growth and 273% net income growth.

“It was a great way for Mollenkopf to close his Qualcomm career,” Moorhead said. “Both QCT and QTL are taking advantage of the rising demand for 5G smartphones available at nearly every price point.”

Moorhead heaped praise on Qualcomm’s other business segments too, noting the 39% revenue growth in RF chips, 40% growth in automotive and 71% growth in IoT.

“These numbers likely make Qualcomm the largest smartphone RF provider and one of the largest IoT chip manufacturers,” he said. “In QTL just keeps the hits coming adding 10 more 5G licenses and taking fully advantage of the new China opportunities.”

Holger Mueller of Constellation Research Inc. agreed that Qualcomm was firing on all cylinders in the first quarter, noting that we rarely every see 50% revenue growth at a company that’s already in the $5 billion-plus revenue range. “When all revenue segments are up, and the weakest one is up only by 39%, it is clearly very good times,” he said.

Mollenkopf, who will be replaced as Qualcomm’s CEO by its current President Cristiano Amon (pictured), said he was leaving the company in a strong position for continued growth and remains confident in its ability to execute on its future opportunities.

In a conference call, Amon told analysts that one of his first jobs will be to try to help alleviate the global shortage of computer chips that has reportedly caused Apple Inc. to scale back the production of some MacBook and iPad models. The shortage has affected other industries too, notably the automotive sector, but Amon said he expects supply conditions to improve by the end of the year.

“Despite the industrywide semiconductor supply shortage, we’re utilizing our scale and working across our entire global supply chain to maximize our ability to capture this opportunity,” Amon said. “We expect material improvements by the end of the calendar year due to planned capacity builds and multi-sourcing initiatives.”

Mueller said it will be interesting to watch the transition at Qualcomm as Mollenkopf hands over the reins to Amon. “From a succession perspective, we have a 52-year-old handing over to a 50-year-old, so it seems both will have at least another decade ahead of them. The question then is, what is next for Mollenkopf?” Mueller asked.

For the next quarter, Qualcomm provided an optimistic forecast and raised its guidance for 3G, 4G and 5G handset shipments. It’s modeling earnings of between $1.55 and $1.75 per share on revenue of $7.1 billion to $7.9 billion. That’s well ahead of Wall Street’s forecast of $1.52 per share in earnings on $7.11 billion in sales.

Photo: Qualcomm