QUALCOMM Incorporated reports 58.6% CAPEX growth in 2020 while 3.1% Revenue decline
11/04/2020 • About QUALCOMM Incorporated (
$QCOM) • By InTwits
QUALCOMM Incorporated reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 33.3% in FY2020, 37.4% in FY2019, 10.1% in FY2018, 18.3% in FY2017, 33.6% in FY2016
- QUALCOMM Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's a lot of higher than industry average of 7.3%.
- CAPEX is quite volatile: $1,407m in FY2020, $887m in FY2019, $784m in FY2018, $690m in FY2017, $539m in FY2016
- The company has highly profitable business model: ROIC is 28.1%
- It operates with high leverage: Net Debt/EBITDA is 1.2x while industry average is 0.3x
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 decreased on 3.1%. Annual revenue decline showed slowdown in FY20Q4 - revenue surged on 73.4%. During FY2016-FY2020 Revenue growth topped in FY2019 at 6.8%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.1 pp from 37.4% to 33.3% in FY2020.
Gross Margin decreased on 3.9 pp from 64.6% to 60.7% in FY2020. SG&A as a % of Revenue showed almost no change in FY2020. During FY2016-FY2020 SG&A as a % of Revenue topped in FY2018 at 13.1% and was declining since that time.
Net Income margin increased on 4.0 pp from 18.1% to 22.1% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2018 at -21.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 6.0%. CAPEX/Revenue increased on 2.9 pp from 3.1% in FY2017 to 6.0% in FY2020. For the last three years the average CAPEX/Revenue was 4.4%. CAPEX as a % of Revenue followed a growing trend at 0.79 pp per annum in FY2016-FY2020.
Return on investment
The company operates at high and attractive ROIC (28.1%) and ROE (94.6%). ROIC decreased on 9.8 pp from 38.0% to 28.1% in FY2020. ROE dropped on 58.8 pp from 153% to 94.6% in FY2020.
Leverage (Debt)
Debt level is 1.2x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA surged on 0.8x from 0.5x to 1.2x in FY2020. Debt increased slightly on 1.9% while cash dropped on 43.3%.
QUALCOMM Incorporated has no short term refinancing risk: cash is higher than short term debt (1,057.9%).
Valuation and dividends
The company's trades at EV/EBITDA 22.6x and P/E 32.1x.
Management team
QUALCOMM Incorporated's CEO Steven M Mollenkopf "Steve" has spent 7 years with the company. The company's CFO is Akash Palkhiwala. Akash Palkhiwala has 1 year tenure at the company.
Financial and operational results
FY ended 09/27/2020
QUALCOMM Incorporated ($QCOM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 23,554 | 22,291 | 22,732 | 24,273 | 23,531 | -3.1% |
| Gross Profit | 13,805 | 12,499 | 12,488 | 15,674 | 14,276 | -8.9% |
| SG&A | 2,385 | 2,658 | 2,986 | 2,195 | 2,074 | -5.5% |
| EBITDA | 7,923 | 4,075 | 2,303 | 9,068 | 7,829 | -13.7% |
| EBIT | 6,495 | 2,614 | 742 | | | |
| Interest expence | 297 | 494 | 768 | | | |
| Tax | 1,131 | 555 | 5,377 | | | |
| Net Income | 5,705 | 2,466 | -4,864 | 4,386 | 5,198 | 18.5% |
| Stock Based Compensation | 935 | 914 | 883 | | | |
Balance Sheet
|
|---|
| Cash | 5,946 | 35,029 | 11,777 | 11,839 | 6,707 | -43.3% |
| Accounts Receivable | 2,219 | 3,632 | 2,904 | | | |
| Inventory | 1,556 | 2,035 | 1,693 | | | |
| Accounts Payable | 1,858 | 1,971 | 1,825 | | | |
| Short Term Debt | 1,749 | 2,495 | 1,005 | 2,496 | 634 | -74.6% |
| Long Term Debt | 10,008 | 19,398 | 15,365 | 13,437 | 15,597 | 16.1% |
Cash flow
|
|---|
| Capex | 539 | 690 | 784 | 887 | 1,407 | 58.6% |
| Dividends | 2,990 | 3,252 | 3,466 | | | |
| Acquisitions | 812 | 1,544 | 326 | | | |
Ratios
|
|---|
| Revenue growth | -6.8% | -5.4% | 2.0% | 6.8% | -3.1% | |
| EBITDA growth | 13.3% | -48.6% | -43.5% | 293.7% | -13.7% | |
|
|---|
| Gross Margin | 58.6% | 56.1% | 54.9% | 64.6% | 60.7% | -3.9% |
| EBITDA Margin | 33.6% | 18.3% | 10.1% | 37.4% | 33.3% | -4.1% |
| EBIT Margin | 27.6% | 11.7% | 3.3% | | |
| SG&A, % of revenue | 10.1% | 11.9% | 13.1% | 9.0% | 8.8% | -0.2% |
| SBC, % of revenue | 4.0% | 4.1% | 3.9% | | |
| Net Income Margin | 24.2% | 11.1% | -21.4% | 18.1% | 22.1% | 4.0% |
| CAPEX, % of revenue | 2.3% | 3.1% | 3.4% | 3.7% | 6.0% | 2.3% |
|
|---|
| ROIC | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% | -9.8% |
| ROE | 18.1% | 7.9% | -30.8% | 153.5% | 94.6% | -58.8% |
| Net Debt/EBITDA | 0.7x | -3.2x | 2.0x | 0.5x | 1.2x | 0.8x |
| Interest expence / Average debt | 2.5% | 2.9% | 4.0% | | | |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | | | |
| Employees | 30,500 | 33,800 | 35,400 | | | |
| Revenue/Employee, th. $ | 772 | 659 | 642 | | | |
QUALCOMM Incorporated ($QCOM) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 5,077 | 5,216 | 4,893 | 8,346 | | 4.9% | 4.7% | -49.2% | 73.4% |
| EBITDA | 1,425 | 1,375 | 1,190 | 3,791 | | 34.1% | 7.0% | -79.0% | 260.7% |
| Net Income | 925 | 468 | 845 | 2,960 | | -13.4% | -29.4% | -60.7% | 485.0% |
Balance Sheet
|
|---|
| Cash | 11,109 | 8,403 | 6,120 | 6,707 | | 10.4% | -17.1% | -56.0% | -43.3% |
| Short Term Debt | 2,634 | 2,631 | 628 | 634 | | 163.9% | 163.6% | -79.1% | -74.6% |
| Long Term Debt | 13,830 | 13,838 | 15,799 | 15,597 | | -10.1% | -10.2% | 17.7% | 16.1% |
Ratios
|
|---|
| Gross Margin | 58.4% | 56.0% | 57.5% | 66.9% | | 3.4% | -0.0% | -20.5% | 10.9% |
| EBITDA Margin | 28.1% | 26.4% | 24.3% | 45.4% | | 6.1% | 0.6% | -34.5% | 23.6% |
| Net Income Margin | 18.2% | 9.0% | 17.3% | 35.5% | | -3.8% | -4.3% | -5.0% | 25.0% |
Peers in Semiconductors
Below we provide QUALCOMM Incorporated benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 11.0% | 4.9% | -3.2% | 2.8% |
|---|
| QUALCOMM Incorporated ($QCOM) | - | -5.4% | 2.0% | 6.8% | -3.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 47.2% | 48.6% | 50.2% | 50.4% | 49.2% |
|---|
| QUALCOMM Incorporated ($QCOM) | 58.6% | 56.1% | 54.9% | 64.6% | 60.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.3% |
|---|
| QUALCOMM Incorporated ($QCOM) | 33.6% | 18.3% | 10.1% | 37.4% | 33.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.7% | 4.7% | 4.4% | 3.8% | 3.6% |
|---|
| QUALCOMM Incorporated ($QCOM) | 2.3% | 3.1% | 3.4% | 3.7% | 6.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| Skyworks Solutions, Inc. ($SWKS) | 33.7% | 33.1% | 32.3% | 23.2% | 21.2% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 3.0% | 2.2% | 5.3% |
|---|
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| QUALCOMM Incorporated ($QCOM) | 0.7x | -3.2x | 2.0x | 0.5x | 1.2x |
