The simple version

The money is owed on units another company sells. The licensor is not in the room when they are sold and does not do the counting.

Its own quarter still has to close on time. So it publishes a figure for money owed before the people who owe it have worked that out.

The figure comes mostly from early numbers those customers report. When the real amounts land the following quarter, the published number is adjusted to match.

The numbers

• QUALCOMM Incorporated, Form 10-K for the fiscal year ended September 27, 2026, accession 0000804328-26-000128, filed November 4, 2026, states that licensees primarily pay per-unit royalties based on their sales of products incorporating or using the company's licensed intellectual property.
• The same note states that per-unit royalties are generally based upon a percentage of the wholesale selling price of complete licensed products, net of certain permissible deductions including transportation, insurance and packing costs, with certain products subject to per unit minimums and per unit caps, and that certain products may have a fixed royalty amount per unit.
• The company states that its estimates of sales-based royalties are based largely on preliminary royalty estimates provided by its licensees and, to a lesser extent, an assessment of the volume of devices supplied into the market that incorporate or use the licensed intellectual property, combined with an estimate of the mix of such sales licensee by licensee and the licensees' average wholesale prices.
• The filing states that adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, and that in the periods presented such adjustments result primarily from immaterial differences between preliminary royalty estimates provided by licensees and actual amounts reported and paid by licensees, which are generally received the following quarter.
• The filing lists the estimation of sales-based royalty revenues first among examples of significant accounting estimates and policies that it describes as possibly involving a higher degree of judgment and complexity than others.
• Payment terms for these royalties are described as generally due within the following quarter.
• The company reports on a 52 to 53 week fiscal year ending on the last Sunday in September. Fiscal 2026, 2025 and 2024 included 52, 52 and 53 weeks respectively.
• The filing puts no dollar figure on the later adjustments, describing them as immaterial. We read the note and found none, so no such amount appears in this article.

Why the figure has to be an estimate

Money owed on another company's sales can only be known once those sales are known. The people who know are the ones who made them.

Their counting runs on their own calendar, which does not line up with the licensor's. So by the time the licensor must close its quarter, the only numbers in existence are the early ones its customers have reported.

The accounting rule does not let it wait. A quarter has to be reported on time, so the licensor reports its best estimate and then trues it up when the real figures land.

That makes the published figure a statement about what another company probably sold. It is still the right way to report it, and the correction mechanism is disclosed, but it is a different kind of number from one the company counted itself.

The actual math on a $400 unit

Take a unit priced at $400, a rate of 3 percent, and an early count of 10 million units. The price, the rate and the counts are ours and the filing names none of them.

Three percent of $400 is $12 a unit, so 10 million units gives $120 million, and that is the figure published for the quarter.

Say the real count turns out to be 9.6 million. The overstatement is 400,000 units at $12, which is $4.8 million, and it comes out of a later quarter rather than the one it belonged to.

Now hold the count at 10 million and let the unit price rise to $500. The slice becomes $15 a unit and the quarter becomes $150 million, which is $30 million more for the same number of units and no change in what the licensor supplied.

What this means

A licensing line can move for three separate reasons: more units, dearer units, or a correction to an earlier guess. The published figure does not separate them.

It also means this kind of business is exposed to what its customers charge, not only to how many they sell. A slice of a dearer product is a bigger slice without anything else changing.

The transferable habit is to ask who did the counting behind a number. A figure assembled from counterparties' own early reports carries a different kind of uncertainty from one a company measured directly.

What this is NOT

This article explains how a licensor recognizes money owed on units its customers sell before those units have been counted, using the significant accounting policies note of QUALCOMM Incorporated's Form 10-K for the fiscal year ended September 27, 2026, filed November 4, 2026 and read on November 5, 2026. The $400 unit, the 3 percent rate, the 10 million and 9.6 million counts and the $500 price are all ours and the filing names none of them. The filing puts no dollar figure on the later adjustments and we found none. It is not a recommendation to buy, sell or hold any security and not a view on any company. It is not a suggestion that the estimate is unreliable or the accounting improper: the approach follows the revenue standard, the company discloses the method and the correction, and it describes the differences as immaterial. It is not accounting advice, and it does not forecast unit sales, prices or royalty revenue for anyone. This is not a political endorsement or criticism of anyone.

Sources

• QUALCOMM Incorporated, Form 10-K for the fiscal year ended September 27, 2026, accession 0000804328-26-000128, filed November 4, 2026, Significant Accounting Policies note as rendered in the filing: the per-unit royalty basis and the wholesale selling price of complete licensed products, the per unit minimums and caps, the reliance on preliminary royalty estimates provided by licensees, the subsequent-period adjustment language and the following-quarter timing, the listing of sales-based royalty estimation among the policies involving a higher degree of judgment and complexity, and the fiscal year definition. Read November 5, 2026: https://www.sec.gov/Archives/edgar/data/804328/000080432826000128/R8.htm