QUALCOMM Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to the Qualcomm first quarter and fiscal 2021 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 February 3rd, 2021. The playback number for today's call is 877-660-6853. International callers, please dial 201-612-7415. The playback reservation number is 137-14808. 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 Palkawala. 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 a 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 reconciliation 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 maturely 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 maturely from the forward-looking statements. And now to comments from Qualcomm's Chief Executive Officer, Steve Molenkopf.

Thank you, Mauricio, and good afternoon, everyone. Fiscal 2021 is off to a great start with record first quarter non-GAAP revenues of $8.2 billion, up 63% year-over-year, and record non-GAAP earnings of $2.17 per share, more than doubling from the prior year. The simultaneous global adoption of 5G, combined with increasingly complex technical requirements and a pace of change that is accelerating, drives a significant multi-year industry transition that plays to our strength. QCT revenues of $6.5 billion were also a record, up 81% year over year and 32% sequentially. Notably, our strong performance and outlook would have been even stronger had we not been supply-constrained. Within QCT, we saw strength across our portfolio. Our RF adjacency demonstrated continued growth with quarterly revenues more than doubling year over year and crossing the $1 billion threshold, a significant milestone. We are executing extremely well in our strategy to address many of the technical challenges of delivering a true modem-to-antenna 5G experience and capture a higher dollar share of content in smartphones. We are also well positioned with DesignWinds across the mobile handset ecosystem, a strong pipeline for further growth in smartphones and a roadmap to bring our RF expertise to adjacent industries. Our automotive revenues of $212 million were up 44% year-over-year, and our DesignWinds pipeline has grown to $8.3 billion from just $3 billion three years ago. placing us on a trajectory to achieve our fiscal year 2024 revenue target of $1.5 billion. Our IoT adjacency also passed the $1 billion threshold in Q1 and grew 48% year over year, driven by the growth of our core technologies for the digitization of consumer, networking, and industrial applications. Our team continues to execute extremely well in spite of supply constraints and the continued impact of the pandemic. Our strategy is playing out largely as we expected, positioning us well to capture the rapid deployment of 5G in both the core handset industry as well as creating new opportunities in adjacencies. In our licensing business, our broad portfolio of foundational system-level innovations and intellectual properties across 3G, 4G, and 5G, along with valuable implementation patents, is unmatched and recognized in part by having signed more than 120 5G license agreements, up from 111 license agreements last quarter. Our continued success in licensing reflects our development of foundational technologies, enabling 5G standards coupled with leadership in developing the standards themselves. Leadership in developing the products necessary to implement 5G technology and leadership in enabling the industry to rapidly implement 5G seamlessly worldwide. This process continues through the successive releases of 5G currently under development. as our foundational innovations coupled with our ability to implement 5G in products and coordinate its deployment in new verticals continues to drive progress outside the handset industry. We continue to invest in complementary technologies that will enable the adoption of 5G use cases that will benefit consumers and businesses in a variety of industries, as well as agriculture and the advanced technology important social objectives of both urban and rural environments, including improvements in healthcare and education in a more widely connected future. We have also spent the past decade deep in AI research and development, resulting in the creation of the technology necessary to scale AI across industries and products from smartphones and automotive to the IoT and data centers. To make AI ubiquitous, we focused on making efficient hardware, algorithmic advancements, and software tools available to developers and OEMs. We believe AI will transform industries and our technologies will help accelerate the commercialization and scale of AI, making AI ubiquitous around the globe. Our commitment to our high-performance processor roadmap was reflected in our recently announced proposed acquisition of Nuvia. We look forward to combining Nuvia's world-class CPU and technology design team with Snapdragon to enable our ecosystem of customers to redefine computing performance, drive innovation, and deliver a new class of products and experiences for the 5G era. Just two years ago, we first announced our Snapdragon 855 mobile platform, the world's first commercial platform supporting multi-gigabit 5G, and demonstrated end-to-end 5G consumer experiences with real demos over live millimeter wave 5G networks and devices. Today, we have an expanding portfolio of differentiated 5G solutions across multiple tiers of our Snapdragon mobile platforms. With high-performance basebands, advanced RF front-end designs, and leading-edge process nodes for our flagship solutions, we are well-positioned to address growing 5G demand in the handset space and across our adjacencies. In RF, our position today is the result of executing on our strategy to extend the breadth of the products we offer. In just a few years, we have emerged as one of the largest RF suppliers in the smartphone ecosystem with a long-term roadmap supporting 4G and 5G sub-6 bands in addition to 5G millimeter bands, enabling us to expand our RF leadership into end product applications. The automotive industry continues to change rapidly, and the car is becoming more connected, more autonomous, and more electric. As these trends disrupt the industry, 5G connectivity and new experiences and user demands, such as always-connected digital cabins for infotainment, real-time navigation, and entertainment, are becoming the new standard. We are working to meet the increasing demands of safe and premium driving experiences powered by 4G LTE and 5G-connected services. With integrated cellular V to X technology, Wi-Fi, Bluetooth, and precise positioning technologies, our 4G and 5G platforms are designed to securely connect vehicles to the cloud, each other, and the surrounding environment. With over 150 million vehicles on the road today connected with our modems, we are a leader in automotive telematics. We are evolving our strong position in automotive telematics to a strategic industry partner, building incumbency with continued innovation as the auto industry undergoes rapid transformation. Our third-generation automotive cockpit solutions have been selected by 20 of the top 25 automakers and our recently announced fourth-generation automotive platform demonstrates our leadership in high-performance computer vision, artificial intelligence, and multi-sensor processing. Lastly, our recently announced strategic engagements with General Motors and leading tier one suppliers, including LG Electronics, Google, Panasonic, and Visteon are further evidence of our strong alignment with the automotive industry. Turning to IoT, we continue to drive momentum and compute with the launch of our second generation Snapdragon HCX, the introduction of our commercial and educational platforms for both Windows and Chrome and continued ecosystem progress. We are also driving industry leadership in XR with over 40 design wins and strong ecosystem momentum with global operator partnerships. We believe XR has the potential to be the next computing platform. Our networking solutions target the full potential of Wi-Fi 6 with a blend of advanced technologies and protocols, targeting networks deployed in enterprise, venue, and prosumer applications. We are also extending our advanced Wi-Fi 6 feature profile into the 6 gigahertz spectrum with second generation platforms. We are capitalizing on the transformation in private and public networks, enabling millimeter wave indoor and outdoor launches in North America and Japan with our small cell solution, bringing higher reliability and speeds to consumers, as well as providing connectivity for 5G enterprise private networks of the future. Lastly, We are accelerating deployment of our core technologies for digitization of non-mobile industries across retail, utilities, transportation, and manufacturing applications. It is exciting to see the strategy we laid out several years ago playing out largely as expected and placing Qualcomm in a very strong position for Cristiano to carry the vision forward as he executes on the many opportunities in front of us over many years. Being CEO of Qualcomm for the last seven years has been a privilege and an honor. The foundation of Qualcomm's leadership is a relentless commitment to innovating with great products, focusing on large industries with technical challenges that are hard to solve. This is what always gave me the confidence we would succeed, even when it wasn't obvious, and I have every confidence Cristiano shares this vision. I would now like to turn the call over to Akash.