Investing Club holding Qualcomm (QCOM) reported fantastic second-quarter earnings Wednesday after the bell. Bottom line With beats on every line item and guidance coming in better than expected, there should be no doubt Qualcomm is firing on all cylinders. That's despite a difficult operating environment globally. Management's plan to diversify revenue away from handsets is working and resulting in more room for growth than ever before. CEO Cristiano Amon opened his prepared remarks by calling out secular growth trends, including the "enterprise transformation of the home," merging of physical and digital spaces, the digital transformation of industries, and the automotive digital chassis and 5G. He added that his team's intense focus to gain exposure to these end markets should result in Qualcomm's total addressable market increasing more than sevenfold over the next decade to approximately $700 billion. It's no longer appropriate to view Qualcomm as just a communications company serving one industry, said Amon, since it now serves multiple markets in addition to its core handset chip business. We couldn't agree more and the broad-based strength seen in the results below fully support his statement. Companywide results On the top line, Qualcomm reported record revenue of $11.16 billion (an increase of 41% year over year), which outpaced expectations of $10.6 billion. On the bottom line, adjusted earnings of $3.21 per share (up 69% year on year) was well ahead of the $2.90 per share consensus. Additionally, management returned a total of $1.7 billion to shareholders during the quarter, with $764 million coming via dividends and another $951 million via the repurchase of 6 million shares of common stock. As a reminder, management also announced a 10% increase to the dividend during the quarter, bringing the annualized payout to $3 per share. Segment results Qualcomm reports results in two primary segments, QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm Technology Licensing). QCT is the semiconductor business most think of when considering Qualcomm's operations and generated the bulk of the company's total sales, while QTL grants licenses to use portions of Qualcomm's intellectual property portfolio. Record QCT revenue of $9.55 billion (up 52% year over year) exceeded expectations of $9.01 billion, while QTL revenue, "driven by the most valuable patent portfolio in the industry," of $1.58 billion (down 2% year over year) edged out the $1.55 billion consensus. Additionally, total adjusted earnings before tax came in at came in at $4.26 billion (and increase of 68% year over year), well ahead of the $3.88 billion the Street was anticipating. Driving the strong profitability was a 10-percentage-point margin expansion in QCT to 35% that was partially offset by a 1-percentage point-margin contraction (to 73%) in QTL. Breaking the QCT segment down, we can see the strength was broad based with very strong growth across all categories: Handsets: $6.33 billion (up 56% year over year) versus $6.01 billion expected Radio frequency front-end: $1.16 billion (an increase of 28%) versus $1.13 billion expected Automotive: $339 million (a gain of 41%) versus $282 million expected Internet of Things (IoT): $1.72 billion (up 61%) versus $1.58 billion expected Notably, Qualcomm's automotive backlog — deals they've won that should materialize into revenue in the future — from the quarter at over $16 billion, a $3 billion sequential increase and on the IoT front, management called out strength across all categories (consumer, edge networking and industrial) noting that industrial was the fastest growing. Serving to address any concerns investors may have about Apple (AAPL) bringing chip design in house, record handset revenues were "driven by continued traction with leading smartphone makers Samsung, Xiaomi, Oppo, Vivo and Honor, where Qualcomm's Snapdragon continues to be the mobile technology platform of choice for premium and high-tier Android. Guidance Looking ahead, management guided for fiscal third-quarter revenues to come in between $10.5 billion and $11.3 billion, which even on the low end is well ahead of expectations $10.03 billion coming into the print. Breaking that down a step further, QCT revenues are expected to come in between $9.1 billion and $9.6 billion, again ahead of expectations of $8.44 billion at the low end. QTL revenues are expected to come in between $1.4 billion and $1.6 billion, matching expectations of $1.5 billion at the midpoint. On the bottom line, adjusted earnings are forecast to come in between $2.75 and $2.95 per share, which even on the low end is well ahead of expectations for $2.55 per share. (Jim Cramer's Charitable Trust is long QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
