Applied Materials, Inc. Q3 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Record quarterly performance driven by broad-based semiconductor systems and services demand.
  • Total revenue: approximately $7.3B, up 8% year-over-year and above guidance midpoint.
  • Non-GAAP EPS: record $2.48, up 17% year-over-year.
  • Non-GAAP gross margin: 48.9%, up 150 bps year-over-year.
  • All three business segments (Semiconductor Systems, Applied Global Services, Display) delivered year-over-year growth.

Business Segment Highlights

Semiconductor Systems
  • Revenue: $5.43B, up 10% year-over-year.
  • Drivers: Foundry/logic investments for GAA node ramps; stronger-than-expected DRAM; significant NAND shipment increase (mainly to multinationals in China).
  • Operating margin: 36.4%, up 140 bps year-over-year.
  • Record etch business (> $1B revenue), strong metal deposition (~$1.2B).
  • DRAM revenue expected up ~50% for FY2025 versus FY2024.
Applied Global Services (AGS)
  • Revenue: $1.6B, up 1% year-over-year.
  • Core services up ~10% year-over-year; broader shift toward subscription-based services (over two-thirds of AGS revenue).
  • Operating margin: 27.8%, down 180 bps year-over-year due to mix.
  • 24th consecutive quarter of AGS year-over-year growth.
Display
  • Revenue: $263M; second consecutive sequential growth quarter.
  • Operating margin: 23.6%.

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Operator: Welcome to the Applied Materials Third Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Liz Morali, Vice President of Investor Relations. Liz, you may begin. Liz Morali: Thank you. Good afternoon, and thank you for joining us for today's call. With me today are Gary Dickerson, President and CEO; and Brice Hill, CFO. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections or other statements about future events. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties. Information concerning these risks and uncertainties is discussed in our most recent Form 10-K, 10-Q and 8-K filings with the SEC. We do not intend to update any forward-looking statements. During today's call, we will also reference non-GAAP financial measures. Reconciliations of GAAP to non-GAAP results can be found in today's earnings press release and in our quarterly earnings materials, which are available on our Investor Relations website at ir.appliedmaterials.com. I will now turn the call over to Gary. Gary E. Dickerson: Thanks, Liz. In our third fiscal quarter of 2025, Applied Materials delivered record performance, fueled by strong broad-based demand for semiconductor systems and services. However, as you will see in ou

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