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SEC filingQualcomm's Q3 FY2025 revenue rose 10% to $10.4B, driven by QCT handsets and IoT growth; net income up 25% to $2.7B, with gross margin stable at 56%.
Qualcomm's third quarter of fiscal 2025 saw total revenues of $10.4 billion, a 10% increase year-over-year, driven primarily by strength in QCT's handset and IoT segments. Net income rose 25% to $2.7 billion, outpacing revenue growth due to higher operating leverage and investment gains. Gross margin remained flat at 56%, as higher product costs were offset by improved average selling prices in QCT. Operating expenses were relatively controlled, with R&D declining slightly due to higher non-recurring engineering cost reimbursements, while SG&A increased on higher sales and marketing spend. Investment and other income contributed $358 million, up from $226 million a year ago, largely from gains on marketable securities (IPOs) and deferred compensation plan assets. The effective tax rate rose to 10% from 8%, reflecting lower excess tax benefits from share-based awards.
QCT revenues increased 11% to $8.99 billion, with handsets up 7% (higher ASPs and premium mix), IoT up 24% (broad-based shipments), and automotive up 21% (new vehicle launches). QCT EBT margin expanded 3 points to 30%, aided by revenue growth and stable gross margins. QTL licensing revenues grew 4% to $1.32 billion, despite the loss of Huawei royalties, driven by higher estimated sales of multimode products; EBT margin improved slightly to 71%. QSI segment contributed $149 million in EBT, largely from gains on equity investments following IPOs, compared to $14 million a year ago.
Management highlighted several tailwinds and headwinds. On the positive side, 5G and on-device AI are expected to drive adoption beyond handsets into automotive and IoT. However, headwinds include intensifying competition (notably Apple's shift to in-house modems), U.S./China trade tensions, and tariff uncertainty. The newly enacted One Big Beautiful Bill Act (OBBB) is expected to favorably impact cash flows from fiscal 2026 by reinstating immediate R&D expensing, but may increase future tax provisions. No specific numerical guidance was provided for the upcoming quarters, but management emphasized continued investment in R&D and diversification efforts.
Total cash, cash equivalents, and marketable securities stood at $10.011B as of June 29, 2025, down from $13.3B at September 29, 2024. Restricted cash of $2.323B was segregated for the pending Alphawave acquisition. Total debt increased to $14.788B from $13.270B, reflecting $1.487B in new May 2025 Notes issuance partially offset by $1.365B in repayments. Shareholders' equity rose to $27.209B from $26.274B, driven by net income and OCI gains partially offset by share repurchases and dividends.
Multi-year capacity purchase commitments with integrated circuit suppliers had $2.4B in advance payments on the balance sheet as of June 29, 2025, down from $3.0B at fiscal year-end 2024. Of this, $1.9B was in other current assets and $557M in other assets. The company also disclosed a pending acquisition of Alphawave IP Group plc with an implied enterprise value of approximately $2.4B, funded by restricted cash. No other material contractual obligations were detailed in the Notes.
During the nine months ended June 29, 2025, the company repurchased 41 million shares for $6.347B, leaving $9.7B remaining under the $15.0B program announced November 6, 2024. Dividends totaled $2.848B ($0.89 per share quarterly, up 4.7% YoY). Capital expenditures were $785M (2.4% of sales). Net debt increased by $1.518B, with $1.487B in new long-term debt issued and $1.365B repaid.
QCT segment revenue was $8.993B in Q3 2025 (+11.5% YoY) and $28.546B for the nine months. QCT operating income was $2.671B (29.7% margin) and $8.774B for the nine months. QTL segment revenue was $1.318B (+3.5% YoY) with operating income of $942M (71.5% margin). QSI reported EBT of $149M. QCT revenue streams: Handsets $6.328B, Automotive $984M, IoT $1.681B in Q3. No geographic revenue breakdown was provided in the segment footnote.
Operating cash flow of $10,016 million comfortably exceeded net income from continuing operations of $8,658 million, yielding a CFO/Net Income ratio of 1.16x, indicating solid cash conversion. The primary non-cash add-backs were share-based compensation ($2,120M) and depreciation/amortization ($1,231M), partially offset by a net income tax benefit of $1,535M and net gains on marketable securities ($297M).
Capital expenditures remained flat at $785 million, representing 7.8% of operating cash flow, a moderate intensity level. Free cash flow (CFO minus capex) was approximately $9,231 million, providing ample coverage for capital returns.
Share repurchases surged to $6,347 million (up 125% year-over-year), while dividends paid increased modestly to $2,848 million. Combined capital returns of $9,195 million consumed nearly all of free cash flow, indicating a high payout ratio.
Working capital was a net use of cash: accounts receivable increased $535M, inventories rose $33M, and other assets grew $361M. Trade accounts payable declined $220M, and payroll/benefits liabilities fell $943M, reflecting seasonal or operational timing. The income tax provision less payments line showed a $1,535M benefit, a significant non-cash adjustment. Discontinued operations used $91M in the prior period but none in the current period.