Qualcomm : Q2 FY26 Earnings Conference Call 10-Q

Published: 2026-04-29 16:11:22 ET QCOM

Published on 04/29/2026 at 04:11 pm EDT

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware 95-3685934

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

5775 Morehouse Dr., San Diego, California 92121-1714

(Address of Principal Executive Offices) (Zip Code)

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

QCOM

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

company

☐

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock was 1,054 million at April 27, 2026.

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Stockholders' Equity

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

SIGNATURES

‌QUALCOMM Incorporated

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value amounts)

(Unaudited)

March 29,

2026

September 28,

2025

ASSETS

Current assets:

Cash and cash equivalents

$ 5,435

$ 5,520

Restricted cash

2,323

Marketable securities

4,364

4,635

Accounts receivable, net

4,347

4,315

Inventories

7,368

6,526

Other current assets

1,598

2,435

Total current assets

23,112

25,754

Deferred tax assets

5,968

743

Property, plant and equipment, net

5,071

4,690

Goodwill

14,251

11,358

Other intangible assets, net

1,575

1,148

Other assets

7,159

6,450

Total assets

$ 57,136

$ 50,143

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Trade accounts payable

$ 2,973

$ 2,791

Payroll and other benefits related liabilities

1,370

1,839

Unearned revenues

323

358

Short-term debt

498

Other current liabilities

4,603

4,156

Total current liabilities

9,767

9,144

Unearned revenues

Long-term debt

14,772

14,811

Other liabilities

5,249

4,911

Total liabilities

29,858

28,937

Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding

Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,059 and 1,074 shares issued and outstanding, respectively

Retained earnings

26,901

20,646

Accumulated other comprehensive income

377

560

Total stockholders' equity

27,278

21,206

Total liabilities and stockholders' equity

$ 57,136

$ 50,143

Commitments and contingencies (Note 5) Stockholders' equity:

See accompanying notes.

‌CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data) (Unaudited)

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Revenues:

Equipment and services

$ 9,060

$ 9,359

$ 19,526

$ 19,301

Licensing

1,539

1,620

3,325

3,348

Total revenues

10,599

10,979

22,851

22,649

Costs and expenses:

Cost of revenues

4,900

4,937

10,468

10,098

Research and development

2,463

2,216

4,915

4,446

Selling, general and administrative

898

706

1,763

1,430

Other

Total costs and expenses

8,290

7,859

17,175

15,974

Operating income

2,309

3,120

5,676

6,675

Interest expense

(171)

(163)

(341)

(326)

Investment and other income, net

148

444

391

Income before income taxes

2,232

3,105

5,779

6,740

Income tax benefit (expense)

5,138

(293)

4,596

(748)

Net income

$ 7,370

$ 2,812

$ 10,375

$ 5,992

Basic earnings per share

$ 6.92

$ 2.55

$ 9.71

$ 5.41

Diluted earnings per share

$ 6.88

$ 2.52

$ 9.65

$ 5.36

Shares used in per share calculations:

Basic

1,066

1,104

1,068

1,107

Diluted

1,072

1,115

1,075

1,118

See accompanying notes.

‌CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions) (Unaudited)

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Net income

$ 7,370

$ 2,812

$ 10,375

$ 5,992

Other comprehensive (loss) income, net of income taxes:

Foreign currency translation (losses) gains

(101)

(80)

(134)

Net unrealized (losses) gains on available-for-sale debt securities

(7)

(5)

(22)

Net unrealized (losses) gains on derivative instruments

(86)

(88)

(36)

Other reclassifications included in net income

(4)

(10)

Total other comprehensive (loss) income

(198)

122

(183)

(192)

Comprehensive income

$ 7,172

$ 2,934

$ 10,192

$ 5,800

See accompanying notes.

‌CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

Six Months Ended

March 29,

2026

March 30,

2025

Operating Activities:

Net income

$ 10,375

$ 5,992

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

806

833

Income tax provision less than income tax payments

(5,857)

(899)

Share-based compensation expense

1,749

1,461

Net gains on marketable securities and other investments

(47)

(9)

Equity in net earnings of investees

(83)

(16)

Other items

(47)

(12)

Changes in assets and liabilities:

Accounts receivable, net

227

Inventories

(802)

202

Other assets

1,019

299

Trade accounts payable

229

(97)

Payroll, benefits and other liabilities

208

(773)

Unearned revenues

(194)

(67)

Net cash provided by operating activities

7,414

7,141

Investing Activities:

Capital expenditures

(1,082)

(491)

Purchases of debt and equity marketable securities

(1,925)

(3,326)

Proceeds from sales and maturities of debt and equity marketable securities

1,985

2,155

Acquisitions and other investments, net of cash acquired

(1,238)

(341)

Other items

Net cash used by investing activities

(2,222)

(1,960)

Financing Activities:

Proceeds from short-term debt

1,246

500

Repayment of short-term debt

(750)

(500)

Repayment of debt of acquired company

(174)

Proceeds from issuance of common stock

201

Repurchases and retirements of common stock

(5,442)

(3,498)

Dividends paid

(1,895)

(1,880)

Payments of tax withholdings related to vesting of share-based awards

(536)

(609)

Other items

(24)

(3)

Net cash used by financing activities

(7,575)

(5,789)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(25)

(38)

Net decrease in total cash, cash equivalents and restricted cash

(2,408)

(646)

Total cash and cash equivalents at beginning of period (including $2,323 classified as restricted cash at September 28, 2025)

7,843

7,849

Total cash and cash equivalents at end of period

$ 5,435

$ 7,203

See accompanying notes.

‌CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions, except per share data) (Unaudited)

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Total stockholders' equity, beginning balance

$ 23,073

$ 26,880

$ 21,206

$ 26,274

Common stock and paid-in capital:

Balance at beginning of period

$ -

Common stock issued under employee benefit plans

200

201

Repurchases and retirements of common stock

(743)

(632)

(3,243)

(1,108)

Share-based compensation

889

726

1,809

1,516

Tax withholdings related to vesting of share-based payments

(256)

(294)

(536)

(609)

Common stock issued in acquisition

1,903

Common stock issued to settle convertible debt

Balance at end of period

Retained earnings:

Balance at beginning of period

22,498

26,607

20,646

25,687

Net income

7,370

2,812

10,375

5,992

Repurchases and retirements of common stock

(1,992)

(1,120)

(2,161)

(2,406)

Dividends

(975)

(966)

(1,959)

(1,940)

Balance at end of period

26,901

27,333

26,901

27,333

Accumulated other comprehensive income:

Balance at beginning of period

575

273

560

587

Other comprehensive (loss) income

(198)

122

(183)

(192)

Balance at end of period

377

395

377

395

Total stockholders' equity, ending balance

$ 27,278

$ 27,728

$ 27,278

$ 27,728

Dividends per share announced

$ 0.89

$ 0.85

$ 1.78

$ 1.70

See accompanying notes.

Financial Statement Preparation. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for our fiscal year ended September 28, 2025. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. Each of the three and six months ended March 29, 2026 and March 30, 2025 included 13 weeks and 26 weeks, respectively. Our fiscal year for 2026 will include 52 weeks.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements.

Income Tax Disclosures: In December 2023, the FASB issued new requirements to disclose annually certain additional detailed income tax information related to the effective tax rate reconciliation and income taxes paid, among other items. We will adopt the new requirements for our annual periods starting in fiscal 2026, which can be applied on a retrospective or prospective basis.

Income Statement - Expense Disaggregation Disclosures: In November 2024, the FASB issued new requirements to disclose certain additional expense information on an annual and interim basis, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. We will adopt the new requirements for our annual periods starting in fiscal 2028 (and interim periods thereafter) on a prospective basis.

Inventories (in millions)

March 29,

2026

September 28,

2025

Raw materials

$ 580

$ 336

Work-in-process

4,346

3,985

Finished goods

2,442

2,205

$ 7,368

$ 6,526

We have multi-year capacity purchase commitments with certain suppliers of our integrated circuit products. Total advance payments related to multi-year capacity purchase commitments recorded on our condensed consolidated balance sheets at March 29, 2026 and September 28, 2025 were $782 million and $1.9 billion, respectively, of which $469 million and $1.5 billion were recorded in other current assets, respectively, and $313 million and $357 million were recorded in other assets, respectively.

Other Current Liabilities (in millions)

March 29,

2026

September 28,

2025

Customer incentives and other customer-related liabilities

$ 2,865

$ 1,948

Income taxes payable

508

1,007

Other

1,230

1,201

$ 4,603

$ 4,156

Interest Rate Swaps. At March 29, 2026 and September 28, 2025, we had outstanding interest rate swaps with an aggregate notional amount of $5.0 billion and $3.6 billion, respectively, that are designated as fair value hedges and allow us to effectively convert fixed-rate payments into floating-rate payments on a portion of our outstanding long-term debt.

Commercial Paper Program. We have an unsecured commercial paper program, which provides for the issuance of up to $4.5 billion of commercial paper. At March 29, 2026 and September 28, 2025, we had $498 million and no amounts, respectively, of outstanding commercial paper recorded as short-term debt.

Revenues. We disaggregate our revenues by segment (Note 6), by products and services (as presented on our condensed consolidated statements of operations), and for our QCT (Qualcomm CDMA Technologies) segment, by revenue stream, which is based on the industry and application in which our products are sold (as presented below). In certain cases, the determination of QCT revenues by industry and application requires the use of certain assumptions. Substantially all of QCT's revenues consist of equipment revenues that are recognized at a point in time, and substantially all of QTL's (Qualcomm Technology Licensing) revenues represent licensing revenues that are recognized over time and are principally from royalties generated through our licensees' sales of mobile handsets.

QCT revenue streams were as follows (in millions):

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Handsets (1)

$ 6,024

$ 6,929

$ 13,848

$ 14,503

Automotive (2)

1,326

959

2,427

1,920

IoT (internet of things) (3)

1,726

1,581

3,414

3,130

Total QCT revenues

$ 9,076

$ 9,469

$ 19,689

$ 19,553

Includes revenues from products sold for use in mobile handsets.

Includes revenues from products sold for use in automobiles, including connectivity, digital cockpit and advanced driver assistance systems (ADAS) and automated driving (AD).

Primarily includes products sold for use in the following industries and applications: consumer (including personal computers (PCs), extended reality (XR) and other personal computing devices), edge networking (including mobile broadband and wireless access points) and industrial (including handhelds, retail, tracking and logistics and utilities).

Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods generally include certain sales-based royalty revenues related to system software, certain amounts related to customer incentives and licensing revenues recognized related to devices sold in prior periods (including revenues resulting from certain settlements and adjustments to prior period royalty estimates, which include the impact of the reporting by our licensees of actual royalties due) and were as follows (in millions):

Three Months Ended

Six Months

Ended

March 29, March 30,

2026 2025

March 29,

2026

March 30,

2025

Revenues recognized from previously satisfied performance obligations

$ 132 $ 285

$ 313 $

526

Remaining performance obligations, which are primarily included in unearned revenues (as presented on our condensed consolidated balance sheets), represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license

agreements. Our patent license agreements with key OEMs are generally long-term, with remaining terms expiring between fiscal 2027 and 2031. We generally seek to renew or renegotiate such license agreements prior to expiration.

Concentrations. A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL segments. The comparability of customer/licensee concentrations for the periods presented are impacted by the timing of customer/licensee device launches and/or innovation cycles and other seasonal trends, among other fluctuations in demand. Revenues from each customer/licensee that were 10% or greater of total revenues were as follows:

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Customer/licensee (x)

24%

27%

20%

21%

Customer/licensee (y)

Customer/licensee (z)

*Less than 10%

Other Income, Costs and Expenses. Other expenses in the three months and six months ended March 29, 2026 consisted of $29 million in restructuring and restructuring-related charges (substantially all of which related to severance costs).

Investment and Other Income, Net (in millions)

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Interest and dividend income

$ 113

$ 167

$ 250

$ 336

Net (losses) gains on marketable securities

(64)

(120)

Net gains (losses) on other investments

(5)

217

Net losses on deferred compensation plan assets

(56)

(34)

(13)

(20)

Impairment losses on other investments

(12)

(16)

(23)

(41)

Equity in net earnings of investees

Other

$ 94

$ 148

$ 444

$ 391

In the fourth quarter of fiscal 2025, tax reform legislation included in the One Big Beautiful Bill Act (OBBB) was enacted in the United States. The OBBB included significant corporate tax reforms, including changes to the foreign-derived deduction eligible income (FDDEI) regime and changes allowing domestic research and development (R&D) expenditures to be deducted as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). As a result, we expected to be perpetually subject to corporate alternative minimum tax (CAMT) and established a

$5.7 billion valuation allowance on our federal deferred tax assets in fiscal 2025.

In the second quarter of fiscal 2026, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2026-07, which, among other items, allows us to reduce CAMT by certain previously capitalized domestic R&D expenditures. As a result, we no longer expect to be subject to CAMT in the foreseeable future, and therefore, we now expect to realize our existing federal deferred tax assets. Accordingly, we released our valuation allowance on our federal deferred tax assets resulting in a $5.7 billion income tax benefit in the second quarter of fiscal 2026. Changes in future taxable income, tax laws and other factors may change our determination regarding whether we will be able to realize our deferred tax assets.

We estimate our annual effective income tax rate to be 40% benefit for fiscal 2026, primarily due to the release of our valuation allowance on our federal deferred tax assets. Our annual effective income tax rate for fiscal 2026 also reflects a significant portion of our income qualifying as FDDEI taxable at a 13% effective tax rate and benefits from the federal research and development tax credit. Such benefits from FDDEI for fiscal 2026 will be reduced compared to fiscal 2025 as a result of the current deduction of domestic R&D expenditures under OBBB. However, it will have a favorable effect on our cash flows from operations due to significantly lower cash tax payments.

Our effective tax rate for the second quarter of fiscal 2026 was 230% benefit, primarily due to the release of our valuation allowance on our federal deferred tax assets. Our effective tax rate for the second quarter of fiscal 2025 was 9%, primarily due to net discrete tax benefits.

Stock Repurchase Program. On March 17, 2026, we announced a new $20.0 billion stock repurchase program, which was in addition to the then-remaining repurchase authority of $2.1 billion under the previous program announced in November 2024. The stock repurchase programs have no expiration date. At March 29, 2026, $21.9 billion remained authorized for repurchase under our stock repurchase programs.

Shares Outstanding. Shares of common stock outstanding at March 29, 2026 were as follows (in millions):

Balance at September 28, 2025

1,074

Issued

Repurchased

(34)

Balance at March 29, 2026

1,059

Dividends. On March 17, 2026, we announced an increase in our quarterly dividend per share of common stock from

$0.89 to $0.92, which is effective for dividends payable after March 26, 2026.

Earnings Per Common Share. Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding and the weighted-average number of dilutive common share equivalents, primarily comprised of shares issuable under our share-based compensation plans, during the reporting period, using the treasury stock method. The following table provides information about the diluted earnings per share calculation (in millions):

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Dilutive common share equivalents included in diluted shares

Shares of common stock equivalents not included because the effect would be anti-dilutive or certain performance conditions were not satisfied at the end of the period

Legal and Regulatory Proceedings.

ParkerVision, Inc. v. QUALCOMM Incorporated: On May 1, 2014, ParkerVision, Inc. (ParkerVision) filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents. ParkerVision subsequently reduced the number of patents asserted to three. The asserted patents are now expired, and injunctive relief is no longer available. ParkerVision continues to seek damages related to the sale of many of our radio frequency (RF) products sold between 2008 and 2018. On March 23, 2022, the district court entered judgment in our favor on all claims and closed the case. ParkerVision appealed to the United States Court of Appeals for the Federal Circuit (Federal Circuit), and on September 6, 2024, the Federal Circuit reversed the judgment of the district court, citing certain substantive and procedural issues, and remanded the case to the district court for further proceedings. Following a claim construction ruling by the district court, the parties agreed to a stipulated judgment of non-infringement with respect to certain of ParkerVision's claims (Receiver Claims). On October 2, 2025, the court entered a final judgment in our favor with respect to the Receiver Claims and severed and stayed ParkerVision's remaining claims (Transmitter Claims), pending appeal of the court's claim construction ruling and resulting determination of non-infringement of the Receiver Claims.

ParkerVision has appealed to the Federal Circuit. We intend to continue to vigorously defend ourselves in this matter.

Arm Ltd. v. QUALCOMM Incorporated: On August 31, 2022, Arm Ltd. filed a complaint against us in the United States District Court for the District of Delaware. Our subsidiaries Qualcomm Technologies, Inc. and NuVia, Inc. (Nuvia) are also named in the complaint. The complaint alleges that following our acquisition of Nuvia, we and Nuvia breached Nuvia's

Architecture License Agreement with Arm (the Nuvia ALA) by failing to comply with the termination obligations under the Nuvia ALA. Arm is seeking specific performance, including that we cease all use of and destroy any technology that was developed under the Nuvia ALA, including processor core technology (which Arm alleges includes our custom Qualcomm Oryon CPU cores). On September 30, 2022, we filed our Answer and Counterclaim in response to Arm's complaint denying Arm's claims. Our counterclaim seeks a declaratory judgment that we did not breach the Nuvia ALA or the Technology License Agreement between Nuvia and Arm, and that, following the acquisition of Nuvia, our architected cores (including all further developments, iterations or instantiations of the technology we acquired from Nuvia) and System-on-Chip (SoC) products incorporating such cores are fully licensed under our existing Architecture License Agreement with Arm (the Qualcomm ALA) and Technology License Agreement with Arm (the Qualcomm TLA). A trial was held beginning on December 16, 2024, and on December 20, 2024, the jury found that (i) Qualcomm did not breach the Nuvia ALA and (ii) Qualcomm CPUs that include designs acquired in the Nuvia acquisition are licensed under the Qualcomm ALA. The jury was unable to reach a verdict with respect to Arm's claim as to whether Nuvia breached the Nuvia ALA. The parties filed various post-trial motions, including motions for judgment as a matter of law. On September 30, 2025, the court entered a final judgment upholding the jury's verdict in favor of Qualcomm, granting judgment to Nuvia, and dismissing Arm's remaining claims. On October 1, 2025, Arm filed a notice of appeal to the United States Court of Appeals for the Third Circuit. We intend to continue to vigorously defend ourselves against Arm's claims in this matter.

On April 18, 2024, we filed a separate complaint, captioned QUALCOMM Incorporated v. Arm Holdings plc f/k/a Arm Ltd., in the United States District Court for the District of Delaware. The complaint alleges that Arm has breached the Qualcomm ALA by failing to provide certain deliverables that Arm is obligated to provide. The complaint seeks an order that Arm comply with its contractual obligations, damages, and additional relief. On December 16, 2024, we filed a First Amended Complaint alleging additional causes of action based on Arm improperly seeking to terminate the Qualcomm ALA and improperly publicizing that it was seeking to terminate the Qualcomm ALA. On June 3, 2025, we filed a Second Amended Complaint to add a claim that Arm has breached the Qualcomm TLA by failing to provide license offers at commercially reasonable prices and terms. Arm has moved to dismiss our amended complaint. On January 8, 2026, we filed a substantially identical complaint against Arm Ltd., which was subsequently consolidated with the Arm Holdings plc complaint. Trial is scheduled to begin on October 5, 2026.

On October 22, 2024, Arm provided us with a notice alleging that we have breached the Qualcomm ALA by marketing products that contain CPUs that Arm alleges use designs, technology and code created by Nuvia employees prior to our acquisition of Nuvia; by seeking support and verification from Arm for additional products that use such alleged designs, technology and code; and by suing Arm for breach of the Qualcomm ALA. Arm's notice asserts that it will have the right to terminate the Qualcomm ALA if such alleged breaches are not cured within 60 days of such notice. We disagree with Arm's allegations, including that we are, or have been, in breach of the Qualcomm ALA. On January 8, 2025, Arm notified us that it was withdrawing its October 22, 2024 notice of breach and indicated that it has no current plan to terminate the Qualcomm ALA, while reserving its rights pending the outcome of the ongoing litigation.

Contingent Losses and Other Considerations: Litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss, particularly in antitrust and trade regulation investigations. We have not recorded any accrual at March 29, 2026 for contingent losses associated with the matters described above based on our belief that losses, while reasonably possible, are not probable. Further, any possible amount or range of loss cannot be reasonably estimated at this time. The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows. We are engaged in numerous other legal actions not described above (including matters arising in the ordinary course of our business, such as those relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights, among others) and, while there can be no assurance, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.

We are organized on the basis of products and services and have three reportable segments. Our operating segments reflect the way our businesses and management/reporting structure are organized internally and the way our Chief Operating Decision Maker (CODM), who is our CEO, reviews financial information, makes operating decisions and assesses business performance. We also consider, among other items, the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined, as well as the similarities and the level of centralized resource planning within our operating segments, such as the nature of products, the level of shared products, technology and other resources,

production processes and customer base. We conduct business primarily through our QCT semiconductor business and our QTL licensing business. QCT develops and supplies integrated circuit platforms and system software with advanced connectivity and high-performance, low-power computing technologies for use in mobile devices; automotive systems for connectivity, digital cockpit and ADAS/AD; and IoT including consumer electronic devices, industrial devices and edge networking products. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our Data Center business.

Our CODM uses revenues and earnings (loss) before income taxes (EBT) to evaluate performance and allocate resources for our segments primarily through our budget and forecasting process. Our CODM primarily uses these metrics by comparing actual results to forecasted and prior period results. Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense (as presented on the condensed consolidated statements of cash flows, the majority of which is allocated to QCT). Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments' operating performance.

Unallocated income and charges include certain interest expense, certain net investment income, share-based compensation, gains and losses on our deferred compensation plan liabilities and related assets, certain research and development (R&D) expenses, certain selling, general and administrative (SG&A) expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments. Additionally, unallocated charges include amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, asset impairment charges and awards, settlements and/or damages arising from legal or regulatory matters and recognition of the step-up of inventories and property, plant and equipment to fair value. Our CODM does not evaluate our operating segments using discrete asset information.

The table below presents revenues and EBT for reportable segments (in millions):

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

QCT:

Revenues

$ 9,076

$ 9,469

$ 19,689

$ 19,553

Cost of revenues

4,700

4,834

10,145

9,898

Operating expenses (R&D and SG&A)

1,911

1,778

3,777

3,552

EBT

$ 2,465

$ 2,857

$ 5,767

$ 6,103

QTL:

Revenues

$ 1,382

$ 1,319

$ 2,974

$ 2,854

Costs and expenses (1)

388

390

750

768

EBT

$ 994

$ 929

$ 2,224

$ 2,086

QSI:

Revenues

$ -

Operating expenses

Investment and other (expense) income, net

(27)

154

EBT

$ (30)

$ 10

$ 149

$ 29

Substantially all of QTL's costs and expenses are comprised of operating expenses.

Consolidated revenues and EBT include the following reconciling items (in millions):

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025

March 29,

2026

March 30,

2025

Revenues

Reportable segments

$ 10,458

$ 10,788

$ 22,663

$ 22,407

Nonreportable segments

141

188

Unallocated revenues

143

$ 10,599

$ 10,979

$ 22,851

$ 22,649

EBT

Reportable segments

$ 3,429

$ 3,796

$ 8,140

$ 8,218

Nonreportable segments

(121)

(7)

(204)

(6)

Unallocated revenues

143

Unallocated cost of revenues

(95)

(60)

(178)

(119)

Unallocated R&D expenses

(616)

(558)

(1,314)

(1,156)

Unallocated SG&A expenses

(274)

(184)

(573)

(372)

Unallocated other expenses

(29)

Unallocated interest expense

(171)

(163)

(341)

(326)

Unallocated investment and other income, net

109

138

278

358

$ 2,232

$ 3,105

$ 5,779

$ 6,740

Certain revenues were not allocated to our segments in our management reports because they were not considered in evaluating segment results. Unallocated revenues in the second quarter and first six months of fiscal 2025 were comprised of licensing revenues resulting from a settlement of a licensing dispute in the second quarter of fiscal 2025.

The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 29, 2026 (in millions):

Level 1

Level 2

Total

Assets

Cash equivalents

$ 1,014

$ 515

$ 1,529

Marketable securities:

Corporate bonds and notes

3,266

Mortgage- and asset-backed securities

863

U.S. Treasury securities and government-related securities

Equity securities

140

Total marketable securities

198

4,166

4,364

Derivative instruments

Other investments (1)

1,138

Total assets measured at fair value

$ 2,350

$ 4,717

$ 7,067

Liabilities

Derivative instruments

$ -

$ 295

Other liabilities (1)

1,134

Total liabilities measured at fair value

$ 1,134

$ 295

$ 1,429

Other investments and other liabilities included in Level 1 are comprised of our deferred compensation plan assets and liabilities.

Long-term Debt. At March 29, 2026, the aggregate fair value of our outstanding fixed-rate notes, based on Level 2 inputs, was approximately $13.7 billion.

Marketable Securities. At March 29, 2026 and September 28, 2025, our marketable securities were all classified as current and were primarily comprised of available-for-sale debt securities (the vast majority of which were corporate bonds and notes).

The contractual maturities of available-for-sale debt securities were as follows (in millions):

March 29,

2026

Years to maturity

Less than one year

$ 870

One to five years

2,489

Five to ten years

No single maturity date

863

Total

$ 4,224

Debt securities with no single maturity date included mortgage- and asset-backed securities.

Alphawave. On December 18, 2025 (the Closing Date), we completed the acquisition of Alphawave IP Group plc (Alphawave) for $2.3 billion, which primarily consisted of $1.8 billion of equity consideration from the issuance of 11 million shares of our common stock, which includes certain securities exchangeable for shares of our common stock (Exchangeable Shares), and $301 million of cash consideration. Alphawave develops high-speed wired connectivity technologies delivering IP, custom silicon and connectivity products. The acquisition is intended to further accelerate, and provide key assets for, our expansion into data centers.

In connection with the acquisition, we issued Exchangeable Shares of Aqua ExchangeCo ULC, an indirect, wholly-owned subsidiary of QUALCOMM Incorporated, to certain Alphawave executives in exchange for their outstanding capital stock. The Exchangeable Shares (no par value; unlimited shares authorized; 4 million shares issued and outstanding as of March 29, 2026) are exchangeable for our common stock on a one-for-one basis and are substantially the economic equivalent of our common stock. The issued and outstanding Exchangeable Shares have been presented together with our common stock in our condensed consolidated financial statements. The Exchangeable Shares had an estimated fair value of

$746 million, of which $453 million is included within the $2.3 billion purchase price and the remainder is subject to a four-year service requirement post-acquisition and will be recognized as compensation expense.

The preliminary purchase price allocation shown below could change as the fair values of the tangible and intangible assets acquired and liabilities assumed, and the related income tax effects, are finalized during the remainder of the measurement period (which will not exceed 12 months from the Closing Date). The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values was as follows (in millions):

Cash

$ 51

Intangible assets subject to amortization

239

In-process research and development (IPR&D)

107

Goodwill

2,215

Other assets

283

Total assets

2,895

Convertible debt (1)

(278)

Other liabilities

(343)

Total liabilities

(621)

Net assets acquired

$ 2,274

Alphawave's outstanding unsecured convertible bonds were settled in the second quarter of fiscal 2026.

Goodwill related to this transaction was allocated to our Data Center operating segment and is not deductible for tax purposes. Goodwill is primarily attributable to assembled workforce which we expect will help accelerate our expansion into data centers, and certain revenue synergies expected to arise after the acquisition such as anticipated growth from new product sales. Acquired intangible assets subject to amortization primarily consists of completed technology that will be amortized on a straight-line basis over the weighted-average useful life of five years. We valued the completed technology and IPR&D using an income approach based on significant unobservable inputs.

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our consolidated results of operations.

Other. During the first six months of fiscal 2026, we acquired six other businesses for a total accounting purchase price of $985 million. These acquisitions were primarily for the purpose of executing on certain products and technology that support our QCT business, including our diversification strategy. The acquired assets primarily consisted of $272 million of intangible assets and $698 million of goodwill, with $622 million allocated to our QCT segment and $76 million allocated to our Data Center operating segment, all of which is primarily attributable to assembled workforce and certain synergies expected to arise after the acquisitions.

This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in "Part I, Item 1" of this Quarterly Report and with "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the fiscal year ended September 28, 2025 contained in our 2025 Annual Report on Form 10-K.

This Quarterly Report (including but not limited to this section titled Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements. Words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate," "may," "will," "would" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. Additionally, statements concerning future matters such as our future business, prospects, results of operations or financial condition; research and development or technology investments; new or enhanced products, services or technologies; emerging industries or business models; design wins or product launches; industry, market or technology trends, dynamics or transitions; our expectations regarding future demand or supply conditions; strategic investments or acquisitions, and the anticipated timing or benefits thereof; legal or regulatory matters, including the expected impacts of recently enacted or pending tax or other regulatory changes; U.S./China trade or national security tensions; vertical integration by our customers; competition; annual effective tax rates; and other statements regarding matters that are not historical are also forward-looking statements.

Although forward-looking statements in this Quarterly Report reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed under the heading "Risk Factors" below, as well as those discussed elsewhere in this Quarterly Report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Revenues for the second quarter of fiscal 2026 were $10.6 billion, a decrease of 3% compared to the year ago quarter, with net income of $7.4 billion, an increase of 162% compared to the year ago quarter. Key items from the second quarter of fiscal 2026 included:

QCT revenues decreased by 4% in the second quarter of fiscal 2026 compared to the year ago quarter due to lower handset revenues, partially offset by higher automotive and IoT revenues.

QTL revenues increased by 5% in the second quarter of fiscal 2026 compared to the year ago quarter, primarily due to an increase in estimated revenues per unit, which was primarily driven by favorable mix.

We recorded a $5.7 billion income tax benefit to release a valuation allowance in the second quarter of fiscal 2026 as we now expect to realize substantially all of our existing federal deferred tax assets as a result of additional guidance issued on corporate alternative minimum tax (CAMT) by the U.S. Department of Treasury and the Internal Revenue Service.

We develop and commercialize foundational technologies and products used across industries and applications from mobile devices to other areas including automotive and the internet of things (IoT). We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, including patents and other rights.

We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our Data Center business.

Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries.

Substantially all of our products and services businesses, including QCT, and substantially all of our engineering and research

and development functions are operated by Qualcomm Technologies, Inc. (QTI), a subsidiary of QUALCOMM Incorporated, and QTI's subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns the vast majority of our patent portfolio. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents owned by QUALCOMM Incorporated.

Seasonality. Many of our products and much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand. Our revenues have historically fluctuated based on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles (such as the transition to the next generation of wireless technologies). This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when licensees' sales occur. These trends may or may not continue in the future. Further, the trends for QTL have been, and may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings.

Revenues (in millions)

Three Months Ended Six Months Ended

March 29,

2026

March 30,

2025 Change

March 29,

2026

March 30,

2025 Change

Equipment and services

$ 9,060

$ 9,359

$ (299) $ 19,526

$ 19,301

$ 225

Licensing

1,539

1,620

(81) 3,325

3,348

(23)

$ 10,599

$ 10,979

$ (380) $ 22,851

$ 22,649

$ 202

Second quarter 2026 vs. 2025

The decrease in revenues in the second quarter fiscal 2026 was primarily due to:

$393 million in lower equipment and services revenues from our QCT segment

$143 million in licensing revenues from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results

First six months 2026 vs. 2025

The increase in revenues in the first six months of fiscal 2026 was primarily due to:

$143 million in licensing revenues from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results

Costs and Expenses (in millions, except percentages)

Three Months Ended

Six Months Ended

March 29,

March 30,

March 29,

March 30,

2026

2025

Change

2026

2025

Change

Cost of revenues

$ 4,900

$ 4,937

$ (37) $

10,468

$ 10,098 $

370

Gross margin

54%

55%

54%

55%

Second quarter and first six months 2026 vs. 2025

Gross margin percentage decreased in the second quarter and first six months of fiscal 2026 primarily due to a decrease in QCT gross margin percentage.

Three Months Ended

Six Months Ended

March 29,

March 30,

March 29,

March 30,

2026

2025

Change

2026

2025

Change

Research and development

$ 2,463

$ 2,216

$ 247 $

4,915

$ 4,446 $

469

% of revenues

23%

20%

22%

20%

Second quarter 2026 vs. 2025

The increase in research and development expenses in the second quarter of fiscal 2026 was primarily due to:

First six months 2026 vs. 2025

The increase in research and development expenses in the first six months of fiscal 2026 was primarily due to:

We expect to continue investing in key growth and diversification initiatives. The increase in our share-based compensation expense includes the replacement of our annual cash incentive awards for fiscal 2026 and 2027 with a two-year equity award for our broader non-executive leadership team. This approach is designed to motivate and retain our team to execute our long-term diversification strategy, while further aligning their compensation with the interests of our stockholders.

Three Months Ended

Six Months Ended

March 29, March 30,

2026 2025 Change

March 29,

2026

March 30,

2025

Change

Selling, general and administrative

$ 898 $ 706 $ 192 $

1,763

$ 1,430 $

333

% of revenues

8% 6%

Second quarter 2026 vs. 2025

The increase in selling, general and administrative expenses in the second quarter of fiscal 2026 was primarily due to:

First six months 2026 vs. 2025

The increase in selling, general and administrative expenses in the first six months of fiscal 2026 was primarily due to:

Disclaimer

Qualcomm Inc. published this content on April 29, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2026 at 20:10 UTC.