QUALCOMM Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm second quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question during this time, press star, then the number one on your telephone keypad. To withdraw your question, press star, then the number two. If you're using a speakerphone, please pick up your handset before pressing the numbers. Please limit your questions to one question and one follow-up. As a reminder, this conference is being recorded April 29, 2020. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 137-00396. I would now like to turn the call over to Mauricio Lopez-Hedoyen, Vice President of Investor Relations. Mr. Lopez-Hedoyen, please go ahead.

Thank you, and good afternoon, everyone. Today's call will include prepared remarks by Steve Molenkopf and Akash Balkhawala. In addition, Christiana Mullen, Alex Rogers, and Don Rosenberg will join the question and answer session. You can access our earnings release and a slide presentation that accompanied this call on our Investor Relations website. In addition, this call has been webcast on Qualcomm.com, and the replay will be available on our website later today. During the call today, we will use non-GAAP financial measures as defined in Regulation G, and you can find the related reconciliations to GAAP on our website. We will also make forward-looking statements, including projections and estimates of future events, business or industry trends, or business or financial results. Actual events or results could differ materially from those projected in our forward-looking statements. please refer to our SEC filings, including our most recent 10-K, which contain important factors that could cause actual results to differ materially from forward-looking statements. And now to comments from Qualcomm's Chief Executive Officer, Steve Molenkopf.

Thank you, Mauricio, and good afternoon, everyone. The sudden and dramatic change in how we are living today has impacted nearly every citizen on the planet. On behalf of the 37,000 people in the Qualcomm family, I would like to extend our best wishes around the world as we collectively manage through this unprecedented time. The global stay-at-home orders highlight the critical role that broadband has played in facilitating remote workforce, distance learning, entertainment, telemedicine, communications, and many other things. With billions of people around the world using Qualcomm technology, our mission to invent and commercialize breakthrough wireless technologies, like 5G, has been reinforced and amplified. Over the last three months, I have seen countless examples of our resilient and strong culture working together to solve the daily challenges we face. Our response to the pandemic has been evident in the exceptional execution of our team on all fronts. In Q2, we transitioned to a totally different working environment with the safety of our employees as our highest priority. As a result of the many operational changes we have made over the last several years, we were able to respond quickly when the work-from-home orders began in mid-March with minimal disruption to our operations. Importantly, we were able to limit our on-site essential workforce to a very small number and remain on schedule with our product commitments. From an engineering and operations perspective, we have maintained very high levels of productivity. We continue to advance the 5G roadmap and support customers while meeting a very complex set of R&D and supply chain requirements. We have also implemented remote access to labs, transitioned to cloud-based collaboration, and enabled remote device testing without the need for physical access. We were also able to mitigate the COVID-19 impact to our global supply chain. Despite the challenging environment, where in Q2 we estimate the overall handset market was down approximately 21%, our Q2 non-GAAP earnings of 88 cents per share was at the midpoint of our guidance range we gave in early February, in the early stages of the pandemic. Our QCT growth drivers of 5G design wins, along with higher share of dollar content, are very much intact, as you can see in our revenue per MSM, and as virtually all our 5G design wins continue to be powered by our RF front-end solutions. In our licensing business, we have now signed more than 85 5G license agreements, up from 80 license agreements last quarter. As expected, we recently entered into new long-term global patent license agreements with two leading Chinese handset suppliers, Oppo and Vivo, to cover 5G multimode mobile devices. Turning to the handset market, fiscal Q2 China demand saw a sharp decrease coinciding with COVID-19 restrictions, followed by month-over-month growth as restrictions subsided. This provides a basis to model rest-of-world handset demand trends. As I mentioned earlier, the overall handset market was down approximately 21% in the March quarter, principally from the China impact. In the June quarter, we estimate the overall handset market to be down approximately 30%, driven by the impact of shutdowns in the rest of the world, while benefiting from the rebound we are seeing in China. total demand will depend on the speed of the economic recovery however we see no change in our calendar year 2020 5g smartphone forecast as we look to the second half of calendar 2020 while there are a few regions with minor delays in 5g network deployments overall 5g is progressing as planned and we continue to be well positioned to drive the rapid adoption of 5g globally in closing Qualcomm is in a strong position and on track with our industry-leading product roadmap. We continue to add people in key areas, and we are executing well with a strong balance sheet. I would like to turn the call over to Akash, where he will provide more detail in his prepared remarks.