QUALCOMM Incorporated Net Income dropped on 297% while Revenue increased slightly on 2.0%
11/07/2018 • About QUALCOMM Incorporated (
$QCOM) • By InTwits
QUALCOMM Incorporated reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 10.1% in FY2018, 18.3% in FY2017, 33.6% in FY2016, 27.6% in FY2015, 32.8% in FY2014
- QUALCOMM Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $534m in FY2018, $464m in FY2017, $710m in FY2016, $290m in FY2015, $299m in FY2014
- In the last 5 years the company invested considerably less than D&A: $4,192m vs. $6,814m. In FY2018 this situation was still the same: CAPEX was 784 while D&A was 1,561
- The company has potentially unprofitable business model: ROIC is 2.2%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 2.0%. Revenue growth showed slowdown in FY18Q4 - it was -1.7% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -6.8% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.3 pp from 14.9% to 12.5% in FY2018.
Gross Margin decreased slightly on 1.1 pp from 56.1% to 54.9% in FY2018. Gross Margin stuck to a declining trend at -1.2 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.2 pp from 11.9% to 13.1% in FY2018. SG&A as a % of Revenue stuck to a growing trend at 1.2 pp per annum in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During FY2014-FY2018 SBC as a % of Revenue topped in FY2017 at 4.1%.
Net Income margin dropped on 32.5 pp from 11.1% to -21.4% in FY2018. Net Income margin followed a declining trend at -11.3 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
QUALCOMM Incorporated's CAPEX/Revenue was 3.4% in FY2018. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 2.9%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2016 at 2.3% and was growing since that time.
Accounts receivable as a % of Revenue decreased on 3.5 pp from 16.3% to 12.8% in FY2018. Inventories as a % of Revenue decreased slightly on 1.7 pp from 9.1% to 7.4% in FY2018. Accounts payable as a % of Revenue decreased on 2.3 pp from 20.1% to 17.8% in FY2018.
QUALCOMM Incorporated has spent
$326m on M&A in FY2018 which accounts for 1.4% of revenue.
Return on investment
The company operates at low but positive ROIC (2.2%) and negative ROE (-30.8%). ROIC decreased on 3.6 pp from 5.7% to 2.2% in FY2018. ROE dropped on 38.7 pp from 7.9% to -30.8% in FY2018. ROIC declined at -4.6 pp per annum in FY2014-FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 7.1x. Net Debt / EBITDA jumped on 5.2x from -3.2x to 2.0x in FY2018. Debt dropped on 25.2% while cash dropped on 66.4%.
QUALCOMM Incorporated has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.0x. QUALCOMM Incorporated has no short term refinancing risk: cash is higher than short term debt (1,171.8%).
Average interest expence paid by the company was 4.7% in FY2018.
The company paid
$3,466 despite negative Net Income of $-4,864 in FY2018. Dividends grew on average at 6.0% per annum in the last 5 years).
Management team
QUALCOMM Incorporated's CEO is Steven M Mollenkopf "Steve". Steven M Mollenkopf "Steve" is a founder and has 5 years tenure with the company. CEO total compensation was
$19,975,472 in FY2018 which included
$1,390,739 salary.
At the end of financial year the company had 0.11% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 35,400 employees. The number of employees increased on 4.7%. Average revenue per employee in FY2018 was
$642,147 and it decreased on 2.6%.
Financial and operational results
FY ended 09/30/2018
QUALCOMM Incorporated ($QCOM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 26,487 | 25,281 | 23,554 | 22,291 | 22,732 | 2.0% |
| Gross Profit | 15,801 | 14,903 | 13,805 | 12,499 | 12,488 | -0.1% |
| SG&A | 2,290 | 2,344 | 2,385 | 2,658 | 2,986 | 12.3% |
| EBITDA | 8,700 | 6,990 | 7,923 | 4,075 | 2,303 | -43.5% |
| EBIT | 7,550 | 5,776 | 6,495 | 2,614 | 742 | -71.6% |
| Interest expence | 5 | 104 | 297 | 494 | 768 | 55.5% |
| Tax | 1,244 | 1,219 | 1,131 | 555 | 5,377 | 868.8% |
| Net Income | 7,967 | 5,271 | 5,705 | 2,466 | -4,864 | -297.2% |
| Stock Based Compensation | 779 | 923 | 935 | 914 | 883 | -3.4% |
Balance Sheet
|
|---|
| Cash | 7,907 | 7,560 | 5,946 | 35,029 | 11,777 | -66.4% |
| Accounts Receivable | 2,412 | 1,964 | 2,219 | 3,632 | 2,904 | -20.0% |
| Inventory | 1,458 | 1,492 | 1,556 | 2,035 | 1,693 | -16.8% |
| Accounts Payable | 2,183 | 1,300 | 1,858 | 1,971 | 1,825 | -7.4% |
| Short Term Debt | 0 | 1,000 | 1,749 | 2,495 | 1,005 | -59.7% |
| Long Term Debt | 0 | 9,969 | 10,008 | 19,398 | 15,365 | -20.8% |
Cash flow
|
|---|
| Capex | 1,185 | 994 | 539 | 690 | 784 | 13.6% |
| Dividends | 2,586 | 2,880 | 2,990 | 3,252 | 3,466 | 6.6% |
| Acquisitions | 895 | 3,019 | 812 | 1,544 | 326 | -78.9% |
Ratios
|
|---|
| Revenue growth | 6.5% | -4.6% | -6.8% | -5.4% | 2.0% | |
| EBITDA growth | 5.5% | -19.7% | 13.3% | -48.6% | -43.5% | |
|
|---|
| Gross Margin | 59.7% | 58.9% | 58.6% | 56.1% | 54.9% | -1.1% |
| EBITDA Margin | 32.8% | 27.6% | 33.6% | 18.3% | 10.1% | -8.1% |
| EBIT Margin | 28.5% | 22.8% | 27.6% | 11.7% | 3.3% | -8.5% |
| SG&A, % of revenue | 8.6% | 9.3% | 10.1% | 11.9% | 13.1% | 1.2% |
| SBC, % of revenue | 2.9% | 3.7% | 4.0% | 4.1% | 3.9% | -0.2% |
| Net Income Margin | 30.1% | 20.8% | 24.2% | 11.1% | -21.4% | -32.5% |
| CAPEX, % of revenue | 4.5% | 3.9% | 2.3% | 3.1% | 3.4% | 0.4% |
|
|---|
| ROIC | 20.7% | 14.6% | 15.8% | 5.7% | 2.2% | -3.6% |
| ROE | 21.2% | 14.9% | 18.1% | 7.9% | -30.8% | -38.7% |
| Net Debt/EBITDA | -0.9x | 0.5x | 0.7x | -3.2x | 2.0x | 5.2x |
| Interest expence / Average debt | | 1.9% | 2.6% | 2.9% | 4.7% | 1.8% |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.0% |
| Employees | 31,300 | 33,000 | 30,500 | 33,800 | 35,400 | 4.7% |
| Revenue/Employee, th. $ | 846 | 766 | 772 | 659 | 642 | -2.6% |
QUALCOMM Incorporated ($QCOM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6,035 | 5,220 | 5,599 | 5,803 | | 0.6% | 4.1% | 4.2% | -1.7% |
| EBITDA | 359 | 788 | 1,339 | -258 | | -67.6% | -26.4% | 14.8% | -135.3% |
| Net Income | -5,983 | 330 | 1,219 | -493 | | -977.3% | -55.9% | 40.8% | -393.5% |
Balance Sheet
|
|---|
| Cash | 33,362 | 37,946 | 35,619 | 11,777 | | 384.6% | 432.7% | 138.9% | -66.4% |
| Short Term Debt | 3,465 | 3,733 | 7,103 | 1,005 | | 98.1% | 86.8% | 184.7% | -59.7% |
| Long Term Debt | 19,381 | 19,361 | 15,378 | 15,365 | | 95.1% | 94.8% | -20.7% | -20.8% |
Ratios
|
|---|
| Gross Margin | 55.9% | 57.1% | 55.5% | 50.9% | | -3.4% | 1.1% | 1.8% | -4.2% |
| EBITDA Margin | 5.9% | 15.1% | 23.9% | -4.4% | | -12.5% | -6.3% | 2.2% | -16.8% |
| Net Income Margin | -99.1% | 6.3% | 21.8% | -8.5% | | -110.5% | -8.6% | 5.6% | -11.3% |
Peers in Semiconductors
Below you can find QUALCOMM Incorporated benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 11.0% | 5.0% |
|---|
| QUALCOMM Incorporated ($QCOM) | | -4.6% | -6.8% | -5.4% | 2.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| QUALCOMM Incorporated ($QCOM) | 59.7% | 58.9% | 58.6% | 56.1% | 54.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| QUALCOMM Incorporated ($QCOM) | 32.8% | 27.6% | 33.6% | 18.3% | 10.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| QUALCOMM Incorporated ($QCOM) | 4.5% | 3.9% | 2.3% | 3.1% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 5.2% |
|---|
| QUALCOMM Incorporated ($QCOM) | 20.7% | 14.6% | 15.8% | 5.7% | 2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.3x | -0.0x | 0.4x | 0.3x |
|---|
| QUALCOMM Incorporated ($QCOM) | -0.9x | 0.5x | 0.7x | -3.2x | 2.0x |
