QUALCOMM INC/DE (QCOM) · Quarterly Report (10-Q) SEC Filing

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations 5 Condensed Consolidated Statements of Comprehensive Income 6 Condensed Consolidated Statements of Cash Flows 7 Condensed Consolidated Statements of Stockholders Equity 8 Notes to Condensed Consolidated Financial Statements 9 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3. Quantitative and Qualitative Disclosures About Market Risk 26 Item 4. Controls and Procedures 26 PART II. OTHER INFORMATION Item 1. Legal Proceedings 27 Item 1A. Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 50 Item 3. Defaults Upon Senior Securities 50 Item 4. Mine Safety Disclosures 50 Item 5. Other Information 50 Item 6. Exhibits 51 SIGNATURES 52 (In millions, except par value amounts) (Unaudited) June 28, 2026September 28, 2025 ASSETS Current assets: Cash and cash equivalents$4,533 $5,520 Restricted cash 2,323 Marketable securities3,771 4,635 Accounts receivable, net4,668 4,315 Inventories8,379 6,526 1,653 2,435 Total current assets23,004 25,754 5,679 743 Property, plant and equipment, net5,217 4,690 Goodwill14,274 11,358 Other intangible assets, net1,510 1,148 7,683 6,450 Total assets$57,367 $50,143 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Trade accounts payable$2,897 $2,791 Payroll and other benefits related liabilities1,470 1,839 Unearned revenues280 358 Short-term debt2,489 4,277 4,156 Total current liabilities11,413 9,144 Unearned revenues81 71 12,781 14,811 5,434 4,911 Total liabilities29,709 28,937 Commitments and contingencies (Note 5) Stockholders equity: Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,057 and 1,074 shares issued and outstanding, respectively Retained earnings27,263 20,646 Accumulated other comprehensive income 395 560 27,658 21,206 Total liabilities and stockholders equity$57,367 $50,143 See accompanying notes. (In millions, except per share data) (Unaudited) Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Revenues: Equipment and services$8,475 $8,893 $28,002 $28,193 Licensing1,472 1,472 4,796 4,820 Total revenues9,947 10,365 32,798 33,013 Cost of revenues4,670 4,606 15,138 14,704 Research and development2,607 2,226 7,523 6,672 Selling, general and administrative976 771 2,738 2,200 Other 68 97 Total costs and expenses8,321 7,603 25,496 23,576 1,626 2,762 7,302 9,437 Interest expense(178)(168)(519)(493) Investment and other income, net 1,014 358 1,458 748 Income before income taxes2,462 2,952 8,241 9,692 Income tax (expense) benefit(460)(286)4,136 (1,034) $2,002 $2,666 $12,377 $8,658 Basic earnings per share$1.89 $2.44 $11.63 $7.85 $1.87 $2.43 $11.53 $7.79 Basic1,057 1,092 1,064 1,102 Diluted1,069 1,099 1,073 1,112 (In millions) (Unaudited) Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Net income $2,002 $2,666 $12,377 $8,658 Other comprehensive income (loss), net of income taxes: Foreign currency translation (losses) gains (27)231 (106)97 Net unrealized gains (losses) on available-for-sale debt securities1 1 (3)(21) Net unrealized gains (losses) on derivative instruments40 52 (48)16 Other gains (losses) 1 (1) Other reclassifications included in net income4 (23)(7)(22) Total other comprehensive income (loss)18 262 (165)70 Comprehensive income$2,020 $2,928 $12,212 $8,728 See accompanying notes. (In millions) (Unaudited) Nine Months Ended June 28, 2026June 29, 2025 Operating Activities: Net income$12,377 $8,658 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense1,202 1,231 (5,550)(1,535) 2,579 2,120 (933)(297) 61 93 (149)(13) Other items (52)(10) Changes in assets and liabilities: Accounts receivable, net(264)535 Inventories(1,798)33 Other assets777 361 Trade accounts payable149 (220) Payroll, benefits and other liabilities231 (943) Unearned revenues(225)3 8,405 10,016 Investing Activities: Capital expenditures(1,578)(785) Purchases of debt and equity marketable securities(2,449)(3,785) Proceeds from sales and maturities of debt and equity marketable securities3,896 4,892 (1,573)(711) 26 53 Other items 30 7 (1,648)(329) Financing Activities: Proceeds from short-term debt3,238 998 Repayment of short-term debt(2,743)(998) Repayment of debt of acquired company(174) Proceeds from long-term debt 1,487 Repayment of long-term debt (1,365) 223 201 Repurchases and retirements of common stock(6,806)(6,347) Dividends paid(2,868)(2,848) Payments of tax withholdings related to vesting of share-based awards(888)(878) (28)(10) (10,046)(9,760) (21)(5) Net decrease in total cash, cash equivalents and restricted cash (3,310)(78) Total cash and cash equivalents at beginning of period (including $2,323 classified as restricted cash at September 28, 2025) 7,843 7,849 Total cash and cash equivalents at end of period$4,533 $7,771 (In millions, except per share data) (Unaudited) Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Total stockholders equity, beginning balance $27,278 $27,728 $21,206 $26,274 Common stock and paid-in capital: Balance at beginning of period $ $ $ $ Common stock issued under employee benefit plans223 223 201 Repurchases and retirements of common stock (728)(418)(3,971)(1,526) Share-based compensation 857 687 2,666 2,203 Tax withholdings related to vesting of share-based payments (352)(269)(888)(878) Common stock issued in acquisition 1,903 Common stock issued to settle convertible debt 67 Balance at end of period Retained earnings: Balance at beginning of period 26,901 27,333 20,646 25,687 2,002 2,666 12,377 8,658 Repurchases and retirements of common stock(640)(2,454)(2,801)(4,860) Dividends(1,000)(993)(2,959)(2,933) Balance at end of period 27,263 26,552 27,263 26,552 Accumulated other comprehensive income: Balance at beginning of period 377 395 560 587 18 262 (165)70 Balance at end of period 395 657 395 657 Total stockholders equity, ending balance$27,658 $27,209 $27,658 $27,209 Dividends per share announced$0.92 $0.89 $2.70 $2.59 See accompanying notes. (Unaudited) Note 1. Basis of Presentation and Significant Accounting Policies Update Financial Statement Preparation. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for our fiscal year ended September 28, 2025. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. Each of the three and nine months ended June 28, 2026 and June 29, 2025 included 13 weeks and 39 weeks, respectively. Our fiscal year for 2026 will include 52 weeks. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements. Income Tax Disclosures: In December 2023, the FASB issued new requirements to disclose annually certain additional detailed income tax information related to the effective tax rate reconciliation and income taxes paid, among other items. We will adopt the new requirements for our annual periods starting in fiscal 2026 on a prospective basis. Income Statement - Expense Disaggregation Disclosures: In November 2024, the FASB issued new requirements to disclose certain additional expense information on an annual and interim basis, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. We will adopt the new requirements for our annual periods starting in fiscal 2028 (and interim periods thereafter) on a prospective basis. Note 2. Composition of Certain Financial Statement Items Inventories (in millions) June 28, 2026September 28, 2025 Raw materials$682 $336 Work-in-process5,005 3,985 Finished goods2,692 2,205 $8,379 $6,526 We have multi-year capacity purchase commitments with certain suppliers of our integrated circuit products. Total advance payments related to multi-year capacity purchase commitments recorded on our condensed consolidated balance sheets at June 28, 2026 and September 28, 2025 were $769 million and $1.9 billion, respectively, of which $195 million and $1.5 billion were recorded in other current assets, respectively, and $574 million and $357 million were recorded in other assets, respectively. Other Current Liabilities (in millions) June 28, 2026September 28, 2025 Customer incentives and other customer-related liabilities $2,762 $1,948 Income taxes payable 557 1,007 Other 958 1,201 $4,277 $4,156 9 QUALCOMM Incorporated (Unaudited) Short-term Debt (in millions) June 28, 2026September 28, 2025 Commercial paper$498 $ Current portion of long-term debt1,991 $2,489 $ Interest Rate Swaps. At June 28, 2026 and September 28, 2025, we had outstanding interest rate swaps with an aggregate notional amount of $5.0 billion and $3.6 billion, respectively, that are designated as fair value hedges and allow us to effectively convert fixed-rate payments into floating-rate payments on a portion of our outstanding long-term debt. Revenues. We disaggregate our revenues by segment (Note 6), by products and services (as presented on our condensed consolidated statements 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): Nine Months Ended June 29, 2025June 28, 2026June 29, 2025 Handsets (1) 5,086 $6,328 $18,934 $20,831 Automotive (2)984 4,015 2,904 IoT (internet of things) (3) 1,681 5,244 4,811 8,504 $8,993 $28,193 $28,546 (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: personal AI and compute (including personal computers (PCs), extended reality (XR) and other personal computing devices) and industrial, networking and robotics (including mobile broadband, wireless access points, handhelds, retail, tracking and logistics, and other commercial and home applications). Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods generally include certain sales-based royalty revenues related to system software, certain amounts related to customer incentives and licensing revenues recognized related to devices sold in prior periods (including revenues resulting from certain settlements and adjustments to prior period royalty estimates, which include the impact of the reporting by our licensees of actual royalties due) and were as follows (in millions): Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Revenues recognized from previously satisfied performance obligations$165 $189 $417 $691 Remaining performance obligations, which are primarily included in unearned revenues (as presented on our condensed consolidated balance sheets), 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. Our patent license agreements with key OEMs are generally long-term, with remaining terms expiring between fiscal 2027 and 2031. We generally seek to renew or renegotiate such license agreements prior to expiration. 10 QUALCOMM Incorporated (Unaudited) 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 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 EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Customer/licensee (x)23%18%24%20% Customer/licensee (y)20212021 *13*13 *Less than 10% Other Income, Costs and Expenses. Other expenses in the three months and nine months ended June 28, 2026 consisted of $68 million and $97 million in restructuring and restructuring-related charges (substantially all of which related to severance costs), respectively. Investment and Other Income, Net (in millions) Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Interest and dividend income$97 $160 $347 $495 Net gains on marketable securities (1)726 204 605 241 Net gains on other investments19 5 237 30 149 84 135 65 Impairment losses on other investments(38)(52)(61)(93) 66 (4)149 13 (5)(39)46 (3) $1,014 $358 $1,458 $748 (1) Primarily consist of net unrealized gains related to certain marketable equity securities. Note 3. Income Taxes In the fourth quarter of fiscal 2025, tax reform legislation included in the One Big Beautiful Bill Act (OBBB) was enacted in the United States. The OBBB included significant corporate tax reforms, including changes to the foreign-derived deduction eligible income (FDDEI) regime and changes allowing domestic research and development (R&D) expenditures to be deducted as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). As a result, we expected to be perpetually subject to corporate alternative minimum tax (CAMT) and established a $5.7 billion valuation allowance on our federal deferred tax assets in fiscal 2025. In the second quarter of fiscal 2026, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2026-07, which, among other items, allows us to reduce CAMT by certain previously capitalized domestic R&D expenditures. As a result, we no longer expect to be subject to CAMT in the foreseeable future, and therefore, we now expect to realize our existing federal deferred tax assets. Accordingly, we released our valuation allowance on our federal deferred tax assets resulting in a $5.7 billion income tax benefit in the second quarter of fiscal 2026. Changes in future taxable income, tax laws and other factors may change our determination regarding whether we will be able to realize our deferred tax assets. We estimate our annual effective income tax rate to be 40% benefit for fiscal 2026, primarily due to the $5.7 billion benefit in the second quarter of fiscal 2026 from releasing of our valuation allowance on our federal deferred tax assets. Our annual effective income tax rate for fiscal 2026 also reflects a significant portion of our income qualifying as FDDEI taxable at a 13% effective tax rate and benefits from the federal research and development tax credit. Such benefits from FDDEI for fiscal 2026 will be reduced compared to fiscal 2025 as a result of the current deduction of domestic R&D expenditures under OBBB. However, it will have a favorable effect on our cash flows from operations due to significantly lower cash tax payments. 11 QUALCOMM Incorporated (Unaudited) Our effective tax rate for the third quarter of fiscal 2026 was 19%, which is higher than our estimated annual effective tax rate for fiscal 2026 primarily due to the $5.7 billion benefit in the second quarter from releasing our valuation allowance on our federal deferred tax assets. Our effective tax rate for the third quarter of fiscal 2025 was 10%, primarily due to net discrete tax benefits. Note 4. Capital Stock Stock Repurchase Program. On March 17, 2026, we announced a new $20.0 billion stock repurchase program, which was in addition to the then-remaining repurchase authority of $2.1 billion under the previous program announced in November 2024. The stock repurchase programs have no expiration date. At June 28, 2026, $20.6 billion remained authorized for repurchase under our stock repurchase programs. Shares Outstanding. Shares of common stock outstanding at June 28, 2026 were as follows (in millions): Balance at September 28, 2025 1,074 Issued25 Repurchased(42) Balance at June 28, 2026 1,057 Earnings Per Common Share. Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding and the weighted-average number of dilutive common share equivalents, primarily comprised of shares issuable under our share-based compensation plans, during the reporting period, using the treasury stock method. The following table provides information about the diluted earnings per share calculation (in millions): Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Dilutive common share equivalents included in diluted shares12 7 9 10 Shares of common stock equivalents not included because the effect would be anti-dilutive or certain performance conditions were not satisfied at the end of the period 2 10 1 Note 5. Commitments and Contingencies Legal and Regulatory Proceedings. ParkerVision, Inc. v. QUALCOMM Incorporated: On May 1, 2014, ParkerVision, Inc. (ParkerVision) filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents. ParkerVision subsequently reduced the number of patents asserted to three. The asserted patents are now expired, and injunctive relief is no longer available. ParkerVision continues to seek damages related to the sale of many of our radio frequency (RF) products sold between 2008 and 2018. On March 23, 2022, the district court entered judgment in our favor on all claims and closed the case. ParkerVision appealed to the United States Court of Appeals for the Federal Circuit (Federal Circuit), and on September 6, 2024, the Federal Circuit reversed the judgment of the district court, citing certain substantive and procedural issues, and remanded the case to the district court for further proceedings. Following a claim construction ruling by the district court, the parties agreed to a stipulated judgment of non-infringement with respect to certain of ParkerVision s claims (Receiver Claims). On October 2, 2025, the court entered a final judgment in our favor with respect to the Receiver Claims and severed and stayed ParkerVision s remaining claims (Transmitter Claims), pending appeal of the court s claim construction ruling and resulting determination of non-infringement of the Receiver Claims. ParkerVision has appealed to the Federal Circuit, and a hearing on the appeal was held on June 1, 2026. We intend to continue to vigorously defend ourselves in this matter. Arm Ltd. v. QUALCOMM Incorporated: On August 31, 2022, Arm Ltd. filed a complaint against us in the United States District Court for the District of Delaware. Our subsidiaries Qualcomm Technologies, Inc. and NuVia, Inc. (Nuvia) are also named in the complaint. The complaint alleges that following our acquisition of Nuvia, we and Nuvia breached Nuvia s Architecture License Agreement with Arm (the Nuvia ALA) by failing to comply with the termination obligations under the 12 QUALCOMM Incorporated (Unaudited) Nuvia ALA. Arm is seeking specific performance, including that we cease all use of and destroy any technology that was developed under the Nuvia ALA, including processor core technology (which Arm alleges includes our custom Qualcomm Oryon CPU cores). On September 30, 2022, we filed our Answer and Counterclaim in response to Arm s complaint denying Arm s claims. Our counterclaim seeks a declaratory judgment that we did not breach the Nuvia ALA or the Technology License Agreement between Nuvia and Arm, and that, following the acquisition of Nuvia, our architected cores (including all further developments, iterations or instantiations of the technology we acquired from Nuvia) and System-on-Chip (SoC) products incorporating such cores are fully licensed under our existing Architecture License Agreement with Arm (the Qualcomm ALA) and Technology License Agreement with Arm (the Qualcomm TLA). A trial was held beginning on December 16, 2024, and on December 20, 2024, the jury found that (i) Qualcomm did not breach the Nuvia ALA and (ii) Qualcomm CPUs that include designs acquired in the Nuvia acquisition are licensed under the Qualcomm ALA. The jury was unable to reach a verdict with respect to Arm s claim as to whether Nuvia breached the Nuvia ALA. The parties filed various post-trial motions, including motions for judgment as a matter of law. On September 30, 2025, the court entered a final judgment upholding the jury s verdict in favor of Qualcomm, granting judgment to Nuvia, and dismissing Arm s remaining claims. On October 1, 2025, Arm filed a notice of appeal to the United States Court of Appeals for the Third Circuit. We intend to continue to vigorously defend ourselves against Arm s claims in this matter. On April 18, 2024, we filed a separate complaint, captioned QUALCOMM Incorporated v. Arm Holdings plc f/k/a Arm Ltd., in the United States District Court for the District of Delaware. The complaint alleges that Arm has breached the Qualcomm ALA by failing to provide certain deliverables that Arm is obligated to provide. The complaint seeks an order that Arm comply with its contractual obligations, damages, and additional relief. On December 16, 2024, we filed a First Amended Complaint alleging additional causes of action based on Arm improperly seeking to terminate the Qualcomm ALA and improperly publicizing that it was seeking to terminate the Qualcomm ALA. On June 3, 2025, we filed a Second Amended Complaint to add a claim that Arm has breached the Qualcomm TLA by failing to provide license offers at commercially reasonable prices and terms. On January 8, 2026, we filed a substantially identical complaint against Arm Ltd., which was subsequently consolidated with the Arm Holdings plc complaint. On March 30, 2026, our complaint against Arm Ltd. was amended to include an additional claim for breach of the Qualcomm ALA based on Arm s failure to negotiate certain license terms in good faith. The court denied Arm s motion to strike our amended complaint against Arm Ltd. on July 14, 2026. Trial is scheduled to begin on October 5, 2026. On October 22, 2024, Arm provided us with a notice alleging that we have breached the Qualcomm ALA by marketing products that contain CPUs that Arm alleges use designs, technology and code created by Nuvia employees prior to our acquisition of Nuvia; by seeking support and verification from Arm for additional products that use such alleged designs, technology and code; and by suing Arm for breach of the Qualcomm ALA. Arm s notice asserts that it will have the right to terminate the Qualcomm ALA if such alleged breaches are not cured within 60 days of such notice. We disagree with Arm s allegations, including that we are, or have been, in breach of the Qualcomm ALA. On January 8, 2025, Arm notified us that it was withdrawing its October 22, 2024 notice of breach and indicated that it has no current plan to terminate the Qualcomm ALA, while reserving its rights pending the outcome of the ongoing litigation. Contingent Losses and Other Considerations: Litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss, particularly in antitrust and trade regulation investigations. We have not recorded any accrual at June 28, 2026 for contingent losses associated with the matters described above based on our belief that losses, while reasonably possible, are not probable. Further, any possible amount or range of loss cannot be reasonably estimated at this time. The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows. We are engaged in numerous other legal actions not described above (including matters arising in the ordinary course of our business, such as those relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights, among others) and, while there can be no assurance, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows. Note 6. Segment Information We are organized on the basis of products and services and have three reportable segments. Our operating segments reflect the way our businesses and management/reporting structure are organized internally and the way our Chief Operating Decision Maker (CODM), who is our CEO, reviews financial information, makes operating decisions and assesses business performance. We also consider, among other items, the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined, as well as the similarities and the level of centralized resource planning within 13 QUALCOMM Incorporated (Unaudited) our operating segments, such as the nature of products, the level of shared products, technology and other resources, production processes and customer base. We conduct business primarily through our QCT semiconductor business and our QTL licensing business. QCT develops and supplies integrated circuit platforms and system software with advanced connectivity and high-performance, low-power computing technologies for use in mobile devices; automotive systems for connectivity, digital cockpit and ADAS/AD; and IoT including personal AI and compute devices and industrial, networking and robotics products. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our Data Center business. Our CODM uses revenues and earnings (loss) before income taxes (EBT) to evaluate performance and allocate resources for our segments primarily through our budget and forecasting process. Our CODM primarily uses these metrics by comparing actual results to forecasted and prior period results. Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense (as presented on the condensed consolidated statements of cash flows, the majority of which is allocated to QCT). Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments operating performance. Unallocated income and charges include certain interest expense, certain net investment income, share-based compensation, gains and losses on our deferred compensation plan liabilities and related assets, certain research and development (R&D) expenses, certain selling, general and administrative (SG&A) expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments. Additionally, unallocated charges include amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, asset impairment charges and awards, settlements and/or damages arising from legal or regulatory matters and recognition of the step-up of inventories and property, plant and equipment to fair value. Our CODM does not evaluate our operating segments using discrete asset information. The table below presents revenues and EBT for reportable segments (in millions): Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 QCT: Revenues$8,504 $8,993 $28,193 $28,546 Cost of revenues4,452 4,497 14,598 14,395 Operating expenses (R&D and SG&A)1,860 1,825 5,636 5,377 EBT$2,192 $2,671 $7,959 $8,774 QTL: Revenues$1,278 $1,318 $4,252 $4,172 Costs and expenses (1) 397 376 1,147 1,144 EBT$881 $942 $3,105 $3,028 QSI: Revenues$ $ $ $ 3 3 8 9 Investment and other income, net771 152 925 188 EBT$768 $149 $917 $179 (1) Substantially all of QTL s costs and expenses are comprised of operating expenses. 14 QUALCOMM Incorporated (Unaudited) Consolidated revenues and EBT include the following reconciling items (in millions): Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Revenues Reportable segments$9,782 $10,311 $32,445 $32,718 Nonreportable segments165 54 353 152 Unallocated revenues 143 $9,947 $10,365 $32,798 $33,013 EBT Reportable segments $3,841 $3,762 $11,981 $11,981 Nonreportable segments(214)(10)(419)(15) Unallocated revenues 143 Unallocated cost of revenues(97)(65)(272)(185) Unallocated R&D expenses(755)(595)(2,069)(1,752) Unallocated SG&A expenses(323)(182)(896)(554) Unallocated other expenses (68) (97) Unallocated interest expense(178)(168)(519)(493) Unallocated investment and other income, net256 210 532 567 $2,462 $2,952 $8,241 $9,692 Certain revenues were not allocated to our segments in our management reports because they were not considered in evaluating segment results. Unallocated revenues in the first nine months of fiscal 2025 were comprised of licensing revenues resulting from a settlement of a licensing dispute in the second quarter of fiscal 2025. 15 QUALCOMM Incorporated (Unaudited) Note 7. Fair Value Measurements and Marketable Securities The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at June 28, 2026 (in millions): Level 2 Assets Cash equivalents$1,529 $299 1,828 Marketable securities: Corporate bonds and notes 2,249 Mortgage- and asset-backed securities 557 U.S. Treasury securities and government-related securities32 7 Equity securities (1)926 958 2,813 Derivative instruments 54 Other investments (2)1,293 Total assets measured at fair value$3,780 $3,166 6,946 Liabilities $ $251 251 1,289 Total liabilities measured at fair value$1,289 $251 1,540 (1) Primarily consists of equity securities in certain QSI investees that have completed initial public offerings, which remain subject to short-term lock-up restrictions on the ability to sell. (2) Other investments and other liabilities included in Level 1 are comprised of our deferred compensation plan assets and liabilities. Long-term Debt. At June 28, 2026, the aggregate fair value of our outstanding fixed-rate notes, based on Level 2 inputs, was approximately $14.0 billion. Marketable Securities. At June 28, 2026 and September 28, 2025, our marketable securities were all classified as current and were primarily comprised of available-for-sale debt securities (the vast majority of which were corporate bonds and notes). The contractual maturities of available-for-sale debt securities were as follows (in millions): June 28, 2026 Years to maturity Less than one year$616 One to five years1,670 Five to ten years2 557 Total$2,845 Debt securities with no single maturity date included mortgage- and asset-backed securities. Note 8. Acquisitions Alphawave. On December 18, 2025 (the Closing Date), we completed the acquisition of Alphawave IP Group plc (Alphawave) for $2.3 billion, which primarily consisted of $1.8 billion of equity consideration from the issuance of 11 million shares of our common stock, which includes certain securities exchangeable for shares of our common stock (Exchangeable Shares), and $301 million of cash consideration. Alphawave develops high-speed wired connectivity technologies delivering IP, custom silicon and connectivity products. The acquisition is intended to further accelerate, and provide key assets for, our expansion into data centers. 16 QUALCOMM Incorporated (Unaudited) In connection with the acquisition, we issued Exchangeable Shares of Aqua ExchangeCo ULC, an indirect, wholly-owned subsidiary of QUALCOMM Incorporated, to certain Alphawave executives in exchange for their outstanding capital stock. The Exchangeable Shares (no par value; unlimited shares authorized; 4 million shares issued and outstanding as of June 28, 2026) are exchangeable for our common stock on a one-for-one basis and are substantially the economic equivalent of our common stock. The issued and outstanding Exchangeable Shares have been presented together with our common stock in our condensed consolidated financial statements. The Exchangeable Shares had an estimated fair value of $746 million, of which $453 million is included within the $2.3 billion purchase price and the remainder is subject to a four-year service requirement post-acquisition and will be recognized as compensation expense. The preliminary purchase price allocation shown below could change as the fair values of the tangible and intangible assets acquired and liabilities assumed, and the related income tax effects, are finalized during the remainder of the measurement period (which will not exceed 12 months from the Closing Date). The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values was as follows (in millions): Cash$51 239 107 Goodwill2,210 Other assets288 Total assets2,895 (278) (343) Total liabilities(621) Net assets acquired$2,274 Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Equipment and services$8,475 $8,893 $(418)$28,002 $28,193 $(191) Licensing1,472 1,472 4,796 4,820 (24) $9,947 $10,365 $(418)$32,798 $33,013 $(215) Third quarter 2026 vs. 2025 The decrease in revenues in the third quarter of fiscal 2026 was primarily due to: - $502 million in lower equipment and services revenues from our QCT segment - $40 million in lower licensing revenues from our QTL segment + $88 million in higher equipment and services revenues from our Data Center segment, primarily driven by our acquisition of Alphawave in the first quarter of fiscal 2026 First nine months 2026 vs. 2025 The decrease in revenues in the first nine months of fiscal 2026 was primarily due to: - $367 million in lower equipment and services revenues from our QCT segment - $143 million in licensing revenues from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results + $182 million in higher equipment and services revenues from our Data Center segment, primarily driven by our acquisition of Alphawave in the first quarter of fiscal 2026 + $80 million in higher licensing revenues from our QTL segment Costs and Expenses (in millions, except percentages) Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Cost of revenues $4,670 $4,606 $64 $15,138 $14,704 $434 Gross margin53%56%54%55% Third quarter and first nine months 2026 vs. 2025 Gross margin percentage decreased in the third quarter and first nine months of fiscal 2026 primarily due to a decrease in QCT gross margin percentage. 19 Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Research and development$2,607 $2,226 $381 $7,523 $6,672 $851 % of revenues26%21%23%20% Nine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change $976 $771 $205 $2,738 $2,200 $538 % of revenues10%7%8%7% Nine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change $68 $ $68 $97 $ $97 Third quarter and first nine months 2026 vs. 2025 Other expenses in the third quarter and first nine months of fiscal 2026 consisted of restructuring and restructuring-related charges (substantially all of which related to severance costs). 20 Interest Expense and Investment and Other Income, Net (in millions) Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Interest expense$178 $168 $10 $519 $493 $26 Interest and dividend income$97 $160 $(63)$347 $495 $(148) Net gains on marketable securities726 204 522 605 241 364 Net gains on other investments19 5 14 237 30 207 Net gains on deferred compensation plan assets149 84 65 135 65 70 Impairment losses on other investments(38)(52)14 (61)(93)32 66 (4)70 149 13 136 (5)(39)34 46 (3)49 $1,014 $358 $656 $1,458 $748 $710 Net gains on marketable securities in the third quarter and first nine months of fiscal 2026 was primarily driven by the initial public offerings of certain QSI equity investments. Net gains on other investments in the first nine months of fiscal 2026 was primarily driven by observable price changes on certain of our QSI non-marketable equity investments. The increase in net earnings of investees in the first nine months of fiscal 2026 was primarily driven by an increase in our share of earnings in certain QSI equity method investments. The decrease in interest and dividend income in the first nine months of fiscal 2026 was primarily due to lower balances of interest-bearing securities. Income Tax Expense (in millions, except percentages) The following table summarizes the primary factors that caused our income tax provision to differ from the expected income tax provision at the U.S. federal statutory rate: Three Months EndedNine Months Ended June 28, 2026June 29, 2025June 28, 2026June 29, 2025 Expected income tax provision at federal statutory tax rate$517 $620 $1,731 $2,035 Benefit of releasing valuation allowance on federal deferred tax assets (5,724) Benefit from foreign-derived deduction eligible income (FDDEI)(36)(269)(332)(929) Benefit related to the federal research and development tax credit(58)(67)(156)(186) Foreign currency loss (gain) related to foreign withholding tax receivable 28 (123)148 42 Excess tax benefit associated with share-based awards(50)(21)(68)(98) Other59 146 265 170 Income tax expense (benefit)$460 $286 $(4,136)$1,034 Effective tax rate19%10%(50%)11% We estimate our annual effective income tax rate to be 40% benefit for fiscal 2026, which is lower than the U.S. federal statutory rate. Additional information regarding our annual effective income tax rate and income tax expense is provided in this Quarterly Report in Notes to Condensed Consolidated Financial Statements, Note 3. Income Taxes. In the fourth quarter of fiscal 2025, tax reform legislation included in the One Big Beautiful Bill Act (OBBB) was enacted in the United States. The OBBB included significant corporate tax reforms, including changes to the foreign-derived deduction eligible income (FDDEI) regime and changes allowing domestic research and development (R&D) expenditures to be deducted as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five 21 years). As a result, we expected to be perpetually subject to CAMT and established a $5.7 billion valuation allowance on our federal deferred tax assets in fiscal 2025. In the second quarter of fiscal 2026, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2026-07, which, among other items, allows us to reduce CAMT by certain previously capitalized domestic R&D expenditures. As a result, we no longer expect to be subject to CAMT in the foreseeable future, and therefore, we now expect to realize our existing federal deferred tax assets. Accordingly, we released our valuation allowance on our federal deferred tax assets resulting in a $5.7 billion income tax benefit in the second quarter of fiscal 2026. Changes in future taxable income, tax laws and other factors may change our determination regarding whether we will be able to realize our deferred tax assets. Unrecognized tax benefits were $3.0 billion and $2.7 billion at June 28, 2026 and September 28, 2025, respectively. We believe that it is reasonably possible that our unrecognized tax benefits will change within the next twelve months. Segment Results The following should be read in conjunction with our financial results for the third quarter of fiscal 2026 for each reportable segment included in this Quarterly Report in Notes to Condensed Consolidated Financial Statements, Note 6. Segment Information. QCT Segment (in millions, except percentages) Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Revenues Handsets $5,086 $6,328 $(1,242)$18,934 $20,831 $(1,897) Automotive 1,588 984 604 4,015 2,904 1,111 IoT (internet of things) 1,830 1,681 149 5,244 4,811 433 $8,504 $8,993 $(489)$28,193 $28,546 $(353) EBT (2) $2,192 $2,671 $(479)$7,959 $8,774 $(815) EBT as a % of revenues26%30%-4 points28%31%-3 points Nine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change $1,278 $1,318 $(40)$4,252 $4,172 $80 881 942 (61)3,105 3,028 77 69%71%-2 points73%73% Third quarter 2026 vs. 2025 The decrease in QTL licensing revenues in the third quarter of fiscal 2026 was primarily due to: - $67 million decrease in estimated sales of cellular products - $25 million in lower royalty revenues recognized related to devices sold in prior periods + $59 million increase in revenues per unit, which was primarily driven by favorable mix QTL EBT as a percentage of revenues decreased in the third quarter of fiscal 2026 primarily due to: - higher operating expenses, primarily driven by higher selling, general and administrative expenses - lower revenues First nine months 2026 vs. 2025 The increase in QTL licensing revenues in the first nine months of fiscal 2026 was primarily due to: + $111 million increase in revenues per unit, which was primarily driven by favorable mix + $53 million increase in estimated sales of cellular products - $65 million in lower royalty revenues recognized related to devices sold in prior periods QTL EBT as a percentage of revenues remained approximately flat in the first nine months of fiscal 2026. QSI Segment (in millions) Three Months EndedNine Months Ended June 28, 2026June 29, 2025ChangeJune 28, 2026June 29, 2025Change Revenues$ $ $ $ $ $ EBT 768 149 619 917 179 738 Third quarter 2026 vs. 2025 QSI EBT increased in the third quarter of fiscal 2026 primarily due to higher net gains on marketable securities resulting from the initial public offerings of certain of our equity investments. First nine months 2026 vs. 2025 QSI EBT increased in the first nine months of fiscal 2026 primarily due to $380 million in higher net gains on marketable securities resulting from the initial public offerings of certain of our equity investments, $207 million in higher net gains from observable price changes on certain of our non-marketable equity investments and a $136 million increase in our share of earnings in equity method investments. 23 Looking Forward We believe that on-device AI and high-performance, low-power computing combined with cellular technology (such as 5G) will continue to drive adoption of certain technologies that are already commonly used in smartphones by industries and applications beyond mobile handsets, such as automotive and IoT. We believe it is important that we remain a leader in such technology development, standardization, intellectual property creation and licensing, and a leading developer and supplier of integrated circuit products in order to sustain and grow our business long-term. As we look forward to the next several quarters: We expect recent memory supply constraints and related pricing increases to adversely affect demand from several handset OEMs, which will negatively impact our financial results. The extent to which these conditions may affect our business will depend on future developments, including memory supply availability, memory and device pricing dynamics and end consumer demand for devices, all of which remain uncertain. The semiconductor industry is experiencing a broad-based increase in input costs and capacity constraints across wafer fabrication, assembly, test, advanced packaging, memory and other materials, due in part to increasing demand for leading-edge technologies, AI and data center applications. As a result, we continue to see increased product costs from certain of our key suppliers, which could negatively impact our margins. Further, if these supply and capacity constraints limit the availability of components, manufacturing capacity or related services from our suppliers, we may be unable to fully satisfy customer demand, which could result in lost or delayed revenue and adversely affect our results of operations, cash flows and financial condition. We continue to monitor changes in global trade policy, including tariffs and related trade actions announced by the U.S., China and other countries. The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain. Changes to global trade policies may negatively impact demand, pricing and cost for our products and technologies, and contribute to the inherent uncertainties in estimating future customer demand, which may result in increased excess or obsolete inventory or reserve charges, negatively impacting our results of operations and cash flows. See Risk Factors in this Quarterly Report, including the Risk Factor titled We operate in the highly cyclical semiconductor industry, which is subject to significant downturns. We are also susceptible to declines in global, regional and local economic conditions generally. Our stock price and financial results are subject to substantial quarterly and annual fluctuations due to these dynamics, among others. We expect continued intense competition, including from vertical integration by certain of our customers (for example, Apple and Samsung). In particular, Apple utilizes its own modem (rather than our products) in certain of its smartphones and we expect that Apple will increasingly use its own modem products, rather than our products, in its future devices, which will have a significant negative impact on our QCT revenues, results of operations and cash flows. U.S./China trade relations and/or national security protection policies may negatively impact our business, growth prospects and results of operations. See Risk Factors in this Quarterly Report, including the Risk Factor titled A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions. We are also involved in certain legal proceedings, including those described in this Quarterly Report in Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies. Litigation is inherently uncertain, and, while we intend to continue to vigorously defend ourselves in such matters, the unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows. In addition to the foregoing business and market-based matters, we continue to devote resources to working with and educating participants in the wireless industry and governments as to the benefits of our licensing programs and our extensive technology investments in promoting a highly competitive and innovative wireless industry. However, we expect that certain companies may be dissatisfied with the need to pay reasonable royalties for the use of our technologies and not welcome the success of our licensing programs in enabling new, highly cost-effective competitors to their products. Accordingly, such companies and/or governments or regulators may continue to challenge our business model in various forums throughout the world. Further discussion of risks related to our business is provided in the section titled Risk Factors included in this Quarterly Report. 24 Liquidity and Capital Resources Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations and cash provided by our debt programs. The following tables present selected financial information related to our liquidity at June 28, 2026 and September 28, 2025 and for the first nine months of fiscal 2026 and 2025 (in millions): September 28, 2025Change$4,533 $5,520 $(987) 2,323 (2,323)3,771 4,635 (864)8,304 $12,478 $(4,174)$15,270 $14,811 $459 June 28, 2026June 29, 2025Change$8,405 $10,016 $(1,611)(1,648)(329)(1,319)(10,046)(9,760)(286)Average Price Paid Per Share (1)Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (In thousands)(In thousands)(In millions) March 30, 2026 to April 26, 20263,205 $130.45 3,205 $21,507 April 27, 2026 to May 24, 20262,364 186.06 2,364 21,067 May 25, 2026 to June 28, 20262,277 222.00 2,277 20,562 7,846 7,846 (1) Average Price Paid Per Share excludes cash paid for commissions. (2) On November 6, 2024, we announced a $15.0 billion stock repurchase program. On March 17, 2026, we announced a new $20.0 billion stock repurchase authorization, which was in addition to the remaining repurchase authority under the previous program. The stock repurchase programs have no expiration date. Shares withheld to satisfy statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered stock repurchases under our stock repurchase program and, therefore, are excluded from the table above. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION During the quarter ended June 28, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of Regulation S-K. 50 ITEM 6. EXHIBITS Exhibit NumberExhibit DescriptionFormDate of First FilingExhibit NumberFiled Herewith Amended and Restated Certificate of Incorporation. 8-K3/7/20243.1 3.2Amended and Restated Bylaws. 8-K12/10/20253.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Cristiano R. Amon. X 31.2Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Akash Palkhiwala. X 32.1Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Cristiano R. Amon. X Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Akash Palkhiwala. X 101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.X 101.SCHXBRL Taxonomy Extension Schema.X 101.CALXBRL Taxonomy Extension Calculation Linkbase.X 101.LABXBRL Taxonomy Extension Labels Linkbase.X 101.PREXBRL Taxonomy Extension Presentation Linkbase.X 101.DEFXBRL Taxonomy Extension Definition Linkbase.X Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). 51 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUALCOMM Incorporated Dated: July 29, 2026 /s/ Akash Palkhiwala Akash Palkhiwala Executive Vice President, Chief Financial Officer and Chief Operating Officer 52