Qualcomm today reported its earnings for the second fiscal quarter of 2019, revealing some new details about its surprise settlement with Apple. According to Qualcomm, it will record revenue of between $4.5 billion and $4.7 billion as part of the deal.
Qualcomm explains that it is continuing to asses the accounting impacts of its deal with Apple, but has included an additional estimated revenue of $4.5 billion to $4.7 billion in its guidance for next quarter. This, Qualcomm says, results from a payment through its settlement with Apple and a release of associated liabilities.
Through the deal with Apple, Qualcomm is released from its obligation to refund Apple or its suppliers:
While we continue to assess the accounting impacts of the agreements, our financial guidance for the third quarter of fiscal 2019 includes estimated revenues of $4.5 billion to $4.7 billion resulting from the settlement (which will be excluded from our Non-GAAP results), consisting of a payment from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities.
Qualcomm also says that the payment does not reflect future royalties from Apple. Its guidance separately reflects “revenues for royalties due from Apple and its contract manufacturers for sales made in June 2019.”
Apple and its suppliers had withheld an estimated $7 billion from Qualcomm throughout its legal battle with the chipmaker. Analysts had speculated that Apple had paid Qualcomm around $6 billion as part of the settlement.
Apple reported its earnings Q2 2019 earnings yesterday, but stayed quiet on details of its settlement with Qualcomm. Luca Maestri said that terms of the deal required both companies keep financial details under wraps, though Qualcomm seemingly has a different interpretation of what that means.
Qualcomm CEO Steve Mollenkopf had the following to say about the settlement with Apple in the company’s earnings release:
“We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer. We are executing well on our strategic priorities as 5G commercial launches begin around the world. Our 5G technology and product leadership, as well as our expansion into new industries and product categories, creates a strong foundation for long-term revenue and earnings growth.”
Read Qualcomm’s full release here.