Meta glasses support Qualcomm's revenue slightly exceeding expectations last quarter, while the mobile business unexpectedly weakened, dropping 6% in after-hours trading | Earnings Report Insights

Although supported by Meta's smart glasses business, Qualcomm, the world's largest smartphone chip manufacturer, is weighed down by its core mobile business.

The financial report shows that Qualcomm's total revenue for the last quarter slightly exceeded expectations, but the revenue growth of its mobile business was weaker than Wall Street anticipated. After the earnings report was released, Qualcomm's stock price, which had fallen nearly 1.9%, quickly expanded its after-hours decline, dropping about 6% at one point.

Commentators noted that Qualcomm's total revenue and EPS earnings for the last quarter were both above expectations, but the sharp drop in after-hours stock price may stem from investors' higher expectations and less impressive guidance. Additionally, the unexpectedly weak mobile business has heightened concerns that tariffs will impact related industries.

On July 30, Eastern Time, Qualcomm announced its financial data for the third quarter of fiscal year 2025 (referred to as the second quarter), ending June 29, 2025, and provided performance guidance for the fourth quarter (referred to as the third quarter), following the previous quarter (referred to as the first quarter).

1) Key Financial Data

Revenue: Adjusted operating revenue for the second quarter under non-GAAP was $10.37 billion, a year-on-year increase of 10%. Qualcomm guided for $9.9 billion to $10.7 billion, while analysts expected $10.33 billion, with a year-on-year growth of 15% in the first quarter.

EPS: Adjusted earnings per share (EPS) for the second quarter was $2.77, a year-on-year increase of 19%. Qualcomm guided for $2.60 to $2.80, while analysts expected $2.72, with a year-on-year growth of 17% in the first quarter.

EBT: Pre-tax profit (EBT) for the second quarter was $3.54 billion, a year-on-year increase of 17%, compared to a 16% increase in the first quarter.

2) Segment Revenue

QCT: Revenue from the semiconductor business (QCT), primarily including mobile, automotive, and Internet of Things (IoT) chip products, was $8.99 billion in the second quarter, a year-on-year increase of 11%, compared to an 18% increase in the first quarter.

QTL: Revenue from the technology licensing business (QTL), responsible for intellectual property licensing, was $1.32 billion in the second quarter, a year-on-year increase of 4%, with a slight increase of less than 0.1% in the first quarter.

3) Performance Guidance

Revenue: Revenue for the third quarter is expected to be between $10.3 billion and $11.1 billion, with analysts expecting $10.61 billion. The QCT revenue guidance is $9 billion to $9.6 billion, and the QTL guidance is $1.25 billion to $1.45 billion.

EPS: Adjusted EPS for the third quarter is expected to be between $2.75 and $2.95, with analysts expecting $2.84.

Qualcomm's Revenue Growth Slows to 10% in the Second Quarter, Mobile Business Revenue Increases 7%, Below Expectations

The financial report shows that Qualcomm's total revenue growth slowed from 15% in the first quarter to 10% in the second quarter, but the growth rate was still slightly above analysts' expectations. The EPS earnings for the second quarter exceeded expectations with a 19% increase, accelerating from a 17% growth rate in the first quarter Qualcomm's revenue slowdown in the second quarter is attributed to the deceleration in its main business segment, QCT, where revenue growth fell from 18% in the first quarter to 11% in the second quarter.

In QCT, Qualcomm's core mobile revenue grew by 7% year-on-year to $6.33 billion, accounting for 61% of the company's total revenue, with growth significantly lagging behind the 12% seen in the first quarter. Analysts had expected mobile revenue to be $6.48 billion, representing a year-on-year increase of over 9.8%, nearly 10%.

In QCT, automotive revenue grew by 21% to $980 million, less than half of the 59% growth in the first quarter. The IoT business, which includes industrial chips, Meta's mixed reality headset Quest, and the smart glasses co-launched by Meta and Ray-Ban, saw revenue growth of 24% to $1.68 billion, slowing from a 27% growth rate in the first quarter.

Qualcomm CEO Cristiano Amon stated on Wednesday that manufacturing chips for devices like Meta's smart glasses exemplifies Qualcomm's AI strategy, which embraces "personal AI" and runs AI applications on devices rather than in the cloud.

Among mentioned Meta CEO Mark Zuckerberg's vision statement on "personal superintelligence" AI, stating that Qualcomm's advantages in the IoT field in the second quarter stem from the achievements made with smart glasses.

In terms of performance guidance, Qualcomm provided a midpoint revenue guidance range for the third quarter of $10.7 billion, slightly above analysts' expectations of $10.61 billion, with an EPS guidance midpoint of $2.85, also slightly above analysts' forecast of $2.84.

Some commentators believe that Qualcomm's mobile business revenue has intensified investors' general concerns about the threats facing the recovery of chip growth. In recent days, chip manufacturers like Texas Instruments and Intel, which released earnings reports, have provided cautious outlooks, raising investor worries that the rebound in chip sales may be temporary and not sustainable