QUALCOMM Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Composition of Certain Financial Statement Items

Composition of Certain Financial Statement Items

9 Months Ended

Jun. 23, 2024

Condensed Financial Information Disclosure [Abstract]

Composition of Certain Financial Statement Items


Inventories (in millions)
	June 23, 2024		September 24, 2023
Raw materials	$	264	$	176
Work-in-process	3,316		4,096
Finished goods	2,440		2,150
	$	6,020	$	6,422


Other Current Liabilities (in millions)
	June 23, 2024		September 24, 2023
Customer incentives and other customer-related liabilities	$	2,241	$	1,821
Income taxes payable	701		1,717
Other	812		953
	$	3,754	$	4,491

Debt. In May 2024, we repaid $914 million of fixed-rate notes that matured in May 2024. At June 23, 2024, the aggregate fair value of our outstanding fixed-rate notes, based on Level 2 inputs, was approximately $13.8 billion.

Revenues. We disaggregate our revenues by segment (Note 6), by products and services (as presented on our condensed consolidated statement 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				Nine Months Ended
	June 23, 2024	June 25, 2023	June 23, 2024		June 25, 2023


Handsets (1)			$	5,899	$	5,255	$	18,766	$	17,114


Automotive (2)			811		434		2,012		1,337
IoT (internet of things) (3)			1,359		1,485		3,740		4,557
Total QCT revenues			$	8,069	$	7,174	$	24,518	$	23,008

(1) Includes revenues from products sold for use in mobile handsets.

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

(3) Primarily includes products sold for use in the following industries and applications: consumer (including computing, voice and music and extended reality (XR)), 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 QCT sales-based royalty revenues related to system software, certain amounts related to QCT customer incentives and QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and were as follows (in millions):


	Three Months Ended				Nine Months Ended
	June 23, 2024		June 25, 2023		June 23, 2024		June 25, 2023
Revenues recognized from previously satisfied performance obligations	$	163	$	216	$	364	$	521

Unearned revenues (which are considered contract liabilities) consist primarily of certain customer contracts for which QCT received fees upfront. In the nine months ended June 23, 2024 and June 25, 2023, we recognized revenues of $271 million and $302 million, respectively, that were recorded as unearned revenues at September 24, 2023 and September 25, 2022, respectively.

Remaining performance obligations, which are primarily included in unearned revenues (as presented on our condensed consolidated balance sheet), 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.

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 interim 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				Nine Months Ended
	June 23, 2024		June 25, 2023		June 23, 2024		June 25, 2023

Customer/licensee (x)	18	%	24	%	20	%	21	%
Customer/licensee (y)	17		23		20		28
Customer/licensee (z)	11		*		13		*

*Less than 10%

Other Income, Costs and Expenses. Other expenses in the three months and nine months ended June 23, 2024 primarily consisted of a $75 million charge related to the proposed settlement of the securities class action lawsuit (Note 5). Other expenses in the nine months ended June 25, 2023 included certain restructuring amounts (substantially all of which related to accrued severance costs) from cost reduction actions initiated in fiscal 2023.


Investment and Other Income (Expense), Net (in millions)
	Three Months Ended				Nine Months Ended
	June 23, 2024		June 25, 2023		June 23, 2024		June 25, 2023
Interest and dividend income	$	182	$	79	$	490	$	193
Net gains (losses) on marketable securities	8		(23)		16		(3)
Net gains on other investments	10		17		170		17

Net gains on deferred compensation plan assets	26		48		153		95
Impairment losses on other investments	(5)		(19)		(66)		(120)



Other	5		4		5		(16)
	$	226	$	106	$	768	$	166

Discontinued Operations. On June 1, 2023, SSW Partners completed the sale of Veoneer’s Active Safety business to Magna International Inc. for net cash proceeds of $1.5 billion. On March 1, 2024, SSW Partners completed the sale of Veoneer’s Restraint Control Systems (RCS) business (collectively with the Active Safety business, the Non-Arriver businesses) to American Industrial Partners Capital Fund VII. Through the date of disposition by SSW Partners, the assets and liabilities of the Non-Arriver businesses have been presented as held for sale on our condensed consolidated balance sheets, and the operating results (including the gain or loss on sale, the amounts of which were not material) have been presented as discontinued operations. Also, the cash flows provided (used) by the Non-Arriver businesses are reflected separately as discontinued operations, with the cash proceeds from the sale of the Active Safety and RCS businesses presented as investing activities.