Applied Materials, Inc. Q3 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Applied Materials reported record quarterly revenue of $6.78 billion, up 5% year-over-year (vs. Q3 FY2023).
  • Non-GAAP EPS reached $2.12, up 12% year-over-year and just $0.01 below the all-time company record.
  • Record performance driven by strong demand tied to AI compute, advanced packaging, DRAM, HBM, and continued strength in ICAPS (IoT, Communications, Automotive, Power, Sensors).

Key Financial Highlights

  • Revenue: $6.78B (up 5% YoY).
  • Non-GAAP Gross Margin: 47.4% (up 100 bps YoY).
  • Non-GAAP Operating Expenses: $1.26B (up 8% YoY due to R&D investment in key inflections).
  • Operating Cash Flow: $2.4B; Free Cash Flow: $2B.
  • Capital Returns: $1.2B (dividends + $861M buybacks).

Business Segment Performance

Semiconductor Systems
  • Revenue: $4.92B (up 5% YoY).
  • Operating Margin: 35% (up 130 bps YoY).
  • DRAM revenue: $1.16B (up nearly 50% YoY). DRAM demand globally is very strong; China DRAM revenue declined as expected.
  • NAND revenue: $203M (up 10% YoY).
  • Foundry-logic revenue: $3.56B (down 4% YoY). Leading-edge strengthening sequentially.
  • Gate-all-around (GAA) nodes expected to deliver over $2.5B in system revenue in 2024, with the potential to more than double in 2025.

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Operator: Welcome to the Applied Materials Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir. Michael Sullivan: Good afternoon, everyone, and thank you for joining Applied's third quarter of fiscal 2024 earnings call. Joining me are Gary Dickerson, our President and CEO, and Brice Hill, our Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains forward-looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied's most recent Form 10-Q filing with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today's earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. And with that introduction, I'd like to turn the call over to Gary Dickerson. Gary Dickerson: Thanks, Mike. With record revenues in our third quarter, and earnings towards the high-end of our guided range, Applied Materials continues to deliver strong results in 2024. Secular trends are growing our available market, and our unique and connected portfolio of capabilities, products and services,

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