Latest quarter
Qualcomm reported Q3 FY2026 revenue of $9.9 billion, down −4.03% from $10.4 billion a year earlier. The company’s revenue was above the $9.7 billion consensus, while adjusted EPS of $2.21 was below the $2.22 consensus.
The filing said QCT revenue declined 5% as lower handset revenue more than offset higher automotive and IoT revenue, while QTL revenue declined 3%. It attributed lower handset revenue to lower chipset shipments to certain major OEMs as customers adjusted build plans and inventories amid memory supply constraints and related price increases. Qualcomm reported automotive revenue grew 61.0% year over year.
The filing shows gross margin declined to 53.1% from 55.6% and operating margin fell to 16.3% from 26.6%. Qualcomm reported free cash flow of $495.0 million, compared with $2.6 billion a year earlier.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $9.9 billion | $10.4 billion | −4.03% |
| Diluted EPS | $1.87 | $2.43 | −23.0% |
| Gross margin | 53.1% | 55.6% | −2.5 percentage points |
| Operating margin | 16.3% | 26.6% | −10.3 percentage points |
| Free cash flow | $495.0 million | $2.6 billion | −80.8% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $2.21 | $2.22 | In line |
| Revenue | $9.9 billion | $9.7 billion | Beat by 2.44% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
Cristiano Amon said the industry’s memory prices, higher manufacturing and input costs, and supply-chain shortages were reducing mobile and consumer-electronics revenue and putting short-term pressure on QCT gross margin. He said Qualcomm was implementing price increases and expected gross margins to realign to its operating model as those changes took effect.
Akash Palkhiwala said QCT handset revenue from Chinese OEMs reached its bottom in fiscal Q3 and was expected to return to double-digit sequential growth in fiscal Q4. He said the company expected QCT handset revenue of approximately $5.2 billion in fiscal Q4, with Android growth offset by lower Apple product revenue. Palkhiwala also said Qualcomm expected its share in the upcoming iPhone launch to be materially below its prior 20% estimate because of supply constraints.
In response to analyst questions about margin pressure, Palkhiwala cited a weaker premium-tier mix and higher supply-chain input costs. He said price increases were being applied across end markets but would take effect gradually because of existing contracts and product cycles. He added that custom-chip data-center revenue was expected to carry a gross margin below Qualcomm’s baseline business and reduce QCT’s weighted-average gross margin by one and a half to 2%.
Amon said Qualcomm had begun wafer production for two custom-chip engagements and expected both to generate revenue in the December quarter. Palkhiwala said the company was not providing December-quarter guidance, but expected data-center revenue to begin ramping in that quarter. Amon also said Qualcomm had raised its annualized automotive-sales outlook to approximately $7.0 billion exiting fiscal 2026.
On investment, Palkhiwala said fiscal Q4 non-GAAP operating expenses of approximately $2.7 billion reflected the Modular acquisition and continued investment in Qualcomm’s data-center product roadmap ahead of revenue ramp.
Guidance
Amon raised Qualcomm’s outlook for annualized automotive sales exiting fiscal 2026 from $6 billion to approximately $7.0 billion. He also raised the fiscal 2029 non-handset revenue outlook from $22 billion to $40.0 billion, including more than $24.0 billion across automotive and IoT and more than $15.0 billion in data center revenue.
Palkhiwala said Qualcomm now expected its share in the upcoming iPhone launch to be materially below its prior 20.0% estimate and forecast approximately 50.0% decline in Apple product revenue from the September quarter to the December quarter. He said Qualcomm was not providing December-quarter guidance.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Revenue growth, Non Handset Including Data Center | FY2027 | 60.0% | — | New |
| EPS, non-GAAP | Q4 FY2026 | $2.05–$2.25 | — | — |
| EPS, GAAP | Q4 FY2026 | $1.22–$1.42 | — | — |
| Revenue, Qtl | Q4 FY2026 | $1.2 billion–$1.4 billion | — | New |
| Revenue, Qct | Q4 FY2026 | $8.4 billion–$9.0 billion | — | New |
| Revenue | Q4 FY2026 | $9.7 billion–$10.5 billion | — | New |
| Revenue growth, Apple Products | Q1 FY2027 | 50.0% | — | New |
| Revenue growth, Qct Non Handset | FY2027 | 50.0% | — | New |
| Revenue, Data Center | FY2027 | $5.0 billion | — | New |
| Revenue, Automotive | FY2026 | $7.0 billion | — | New |
| Operating expenses | Q4 FY2026 | $2.7 billion | — | New |
| Revenue, Qct Handset | Q4 FY2026 | $5.2 billion | — | New |
| Operating margin, Qtl | Q4 FY2026 | 68.0%–72.0% | — | New |
| Operating margin, Qct | Q4 FY2026 | 23.0%–25.0% | — | New |
| EPS | Q4 FY2026 | $2.05–$2.25 | — | New |
| Revenue, Data Center | FY2029 | $15.0 billion | — | New |
| Revenue, Automotive IOT | FY2029 | $24.0 billion | — | New |
| Revenue, Non Handset | FY2029 | $40.0 billion | — | New |