Applied Materials, Inc.
CEO : Mr. Gary E. Dickerson
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q4 | 4.8% YoY | 3.8% | -12.1% | 2024-11-14 |
Gary Dickerson says,
Financial Performance and Revenue Growth
- Applied Materials achieved record revenue and earnings in Q4, marking the fifth consecutive year of growth.
- Semiconductor Systems revenue saw substantial growth, with integrated solutions now accounting for approximately 30% of this revenue, and the expectation for further increase.
- Revenue from advanced nodes reached over $2.5 billion in fiscal 2024 and is expected to double by 2025.
- The company’s available market for key technologies expanded from $12 billion to approximately $14 billion for every 100,000 wafer starts per month of capacity with new technologies like gate-all-around transistors.
Strategic Initiatives and Market Positioning
- Significant progress was made in strategic initiatives including the EPIC R&D platform and the Net Zero Playbook.
- Developments in logic, DRAM, and advanced packaging have greatly strengthened Applied’s market position.
- Advanced packaging revenue reached close to $1.7 billion, tripling over the last four years, with expectations of doubling in future years.
- The company captured over 50% of the process equipment spending for gate-all-around nodes, up from mid-to-high 40% for FinFET generation fabs.
Technological Advances and Industry Trends
- Semiconductor industry’s growth is driven by large-scale trends in AI, energy-efficient computing, and robotics.
- Significant opportunities exist in the evolution of device architecture to support energy-efficient computing, with a roadmap requiring a 10,000 times improvement in computing-performance-per-watt over 15 years.
- AI deployment at scale demands advanced materials engineering, a field where Applied Materials holds a leadership position.
Parts and Services Growth
- The parts and services business delivered double-digit growth, with a high percentage of revenues from long-term subscription agreements.
- Record performance for Applied Global Services (AGS) with its 21st consecutive quarter of year-on-year growth.
- First five-year service agreements signed, indicating strong, long-term relationships with customers, enhancing revenue stability.
Future Outlook and Opportunities
- Applied sees continued momentum in AI and energy-efficient computing as key innovation drivers.
- As the industry’s roadmap becomes increasingly complex, materials engineering is poised to grow as a percentage of overall equipment spending.
- New growth opportunities are being pursued through collaboration with customers to accelerate R&D and market introduction of new technologies.
- Advanced technology inflections in areas such as gate-all-around transistors, DRAM, and advanced packaging open up expanded markets for the company.
Brice Hill says,
Fiscal Year 2024 Performance
- Net sales for the full fiscal year were $27.2 billion, representing a 2.5% year-over-year increase.
- Non-GAAP gross margin reached 47.6%, an improvement of 80 basis points from the previous year, marking the highest annual rate since fiscal 2000.
- Non-GAAP earnings per share (EPS) increased by 7.5% year-over-year to $8.65.
- Operating cash flow generated was $8.7 billion, resulting in a free cash flow of $7.5 billion.
Q4 2024 Highlights
- Q4 net sales were $7.05 billion, with a nearly 5% year-over-year increase, driven by growth in Semiconductor Systems and Services.
- Non-GAAP operating expenses were $1.28 billion, accounting for 18.2% of revenue.
- Non-GAAP EPS reached a record $2.32, reflecting a 9% increase from the previous year.
Segment Performance
- Semiconductor Systems: Sales were $5.18 billion in Q4, up 6% year-over-year. Foundry-logic sales saw a 12% increase.
- Applied Global Services (AGS): Achieved record revenue of $1.64 billion, up 11% year-over-year, with a non-GAAP operating margin of 30%.
- Display Business: Revenue was $211 million, aligning with expectations amid lower investment levels.
Shareholder Returns and Financial Position
- Distributed $5 billion to shareholders in fiscal 2024, with share repurchases up 75% from the previous year.
- Quarter-end cash and cash equivalents were $8 billion, with debt at $6.3 billion.
- Approximately $8.9 billion remains under the share repurchase authorization.
Outlook for Fiscal Q1 2025
- Total revenue expected to be $7.15 billion, plus or minus $400 million, a year-over-year increase of approximately 7%.
- Projected non-GAAP EPS of $2.29, plus or minus $0.18.
- Anticipated non-GAAP gross margin of 48.4% and operating expenses of $1.33 billion.
- Semiconductor Systems revenue estimated at $5.3 billion, AGS at $1.65 billion, and Display at $175 million.
Q & A sessions,
Revenue and Earnings Performance
- Record revenue and earnings reported for Q4 2024, marking the fifth consecutive year of growth.
- Fiscal 2024 net sales totaled $27.2 billion, a 2.5% increase year-over-year.
- Non-GAAP gross margin was 47.6%, the highest annual rate since fiscal 2000.
- Non-GAAP earnings per share rose 7.5% to $8.65 for the year.
Strategic Initiatives and Market Growth
- AI and energy-efficient computing are identified as key drivers of industry innovation.
- Major advances anticipated in automation, AI, and clean energy will drive semiconductor value creation.
- Integrated solutions now constitute around 30% of Semiconductor Systems revenue, expected to grow further.
- A $1 trillion semiconductor industry projected by 2030, highlighting the sector’s expansion potential.
Operational and Financial Highlights
| Metric | Q4 2024 | Fiscal 2024 |
|---|---|---|
| Net Sales | $7.05 billion | $27.2 billion |
| Non-GAAP Gross Margin | 47.5% | 47.6% |
| Non-GAAP EPS | $2.32 | $8.65 |
Key Technology Inflections and Market Share
- Significant growth in revenue from gate-all-around nodes, expected to double in 2025.
- Applied Materials expects to capture over 50% of the process equipment spending for these nodes.
- DRAM market share increased by 10 points over the past decade due to focus on enabling next-gen technologies.
- Advanced packaging revenue reached $1.7 billion, with expectations to double as heterogeneous integration increases.
Financial Outlook for Fiscal Q1 2025
- Projected total revenue of $7.15 billion, plus or minus $400 million, representing a 7% year-over-year increase.
- Non-GAAP EPS forecasted at $2.29, plus or minus $0.18.
- Expected non-GAAP gross margin of approximately 48.4% due to favorable mix and cost improvements.
- Semiconductor Systems revenue anticipated to reach $5.3 billion, up 8% year-over-year.
**Conclusion**: The strategic focus on energy-efficient computing and AI, coupled with robust revenue performance and strong market positioning in key technology inflections, positions Applied Materials favorably for sustained growth. This positive outlook is expected to impact stock movement positively as investor confidence is likely to remain strong.
No bad stock 