• Applied Materials Announces First Quarter 2025 Results

    Source: Nasdaq GlobeNewswire / 13 Feb 2025 16:01:52   America/New_York

    • Revenue $7.17 billion, up 7 percent year over year
    • GAAP gross margin 48.8 percent and non-GAAP gross margin 48.9 percent
    • GAAP operating margin 30.4 percent and non-GAAP operating margin 30.6 percent
    • GAAP EPS $1.45 and non-GAAP EPS $2.38, down 40 percent and up 12 percent year over year, respectively
    • Generated $925 million in cash from operations and distributed $1.64 billion to shareholders including $1.32 billion in share repurchases and $326 million in dividends

    SANTA CLARA, Calif., Feb. 13, 2025 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its first quarter ended Jan. 26, 2025.

    “The industry drive to accelerate the development of advanced compute and more sophisticated AI is gaining momentum,” said Gary Dickerson, President and CEO. “Applied Materials is enabling the major device architecture inflections critical for energy-efficient AI and our focus on high-velocity co-innovation creates unique collaboration opportunities with our customers and partners, positioning Applied for continued growth and outperformance in the years to come.”

    “We delivered strong financial performance in the first fiscal quarter, with record revenue, gross margin expansion and robust shareholder distributions,” said Brice Hill, Senior Vice President and CFO. “ For the second fiscal quarter, we are encouraged by the trends supporting continued customer investments to enable leading-edge technology inflections, while also taking into account export control related headwinds.”

    Results Summary

     Q1 FY2025 Q1 FY2024 Change
     (In millions, except per share amounts and percentages)
    Net revenue$7,166  $6,707  7%
    Gross margin 48.8%  47.8% 1.0 point
    Operating margin 30.4%  29.3% 1.1 points
    Net income$1,185  $2,019  (41)%
    Diluted earnings per share$1.45  $2.41  (40)%
    Non-GAAP Results     
    Non-GAAP gross margin 48.9%  47.9% 1.0 point
    Non-GAAP operating margin 30.6%  29.5% 1.1 points
    Non-GAAP net income$1,946  $1,782  9%
    Non-GAAP diluted EPS$2.38  $2.13  12%
    Non-GAAP free cash flow$544  $2,096  (74)%
              

    A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release. See also “Use of Non-GAAP Financial Measures” section.

    Impact of Singapore Tax Incentives

    As a result of new tax incentive agreements in Singapore in fiscal 2025, the company recorded a $644 million, or $0.79 per diluted share, income tax expense due to the remeasurement of deferred tax assets in Singapore.

    Business Outlook

    Applied’s total net revenue, non-GAAP gross margin and non-GAAP diluted EPS for the second quarter of fiscal 2025, including the estimated impact of recently announced U.S. export regulations, are expected to be approximately as follows:

     Q2 FY2025
    (In millions, except percentage and per share amounts) 
    Total net revenue$7,100 +/-$400 
    Non-GAAP gross margin 48.4%  
    Non-GAAP diluted EPS$2.30 +/-$0.18 
            

    This outlook for non-GAAP diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and a gain on asset sale of $0.05 per share, and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.04 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax-related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

    First Quarter Reportable Segment Information

    Semiconductor SystemsQ1 FY2025 Q1 FY2024
     (In millions, except percentages)
    Net revenue$5,356  $4,909 
    Foundry, logic and other 68%  62%
    DRAM 28%  34%
    Flash memory 4%  4%
    Operating income$1,986  $1,744 
    Operating margin 37.1%  35.5%
    Non-GAAP Results  
    Non-GAAP operating income$1,998  $1,754 
    Non-GAAP operating margin 37.3%  35.7%


    Applied Global ServicesQ1 FY2025 Q1 FY2024
     (In millions, except percentages)
    Net revenue$1,594  $1,476 
    Operating income$447  $417 
    Operating margin 28.0%  28.3%
    Non-GAAP Results  
    Non-GAAP operating income$447  $417 
    Non-GAAP operating margin 28.0%  28.3%


    DisplayQ1 FY2025 Q1 FY2024
     (In millions, except percentages)
    Net revenue$183  $244 
    Operating income$14  $25 
    Operating margin 7.7%  10.2%
    Non-GAAP Results  
    Non-GAAP operating income$14  $25 
    Non-GAAP operating margin 7.7%  10.2%


    Corporate and OtherQ1 FY2025 Q1 FY2024
     (In millions)
    Unallocated net revenue$33  $78 
    Unallocated cost of products sold and expenses (305)  (297)
    Total$(272) $(219)
            

    Use of Non-GAAP Financial Measures

    Applied provides investors with certain non-GAAP financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; impairments of assets; gain or loss, dividends and impairments on strategic investments; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

    Management uses these non-GAAP financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied's ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

    Webcast Information

    Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at https://ir.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.

    Forward-Looking Statements
    This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the second quarter of fiscal 2025 and beyond, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic, political and industry conditions, including changes in interest rates and prices for goods and services; the implementation of additional export regulations and license requirements and their interpretation, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies and our ability to obtain licenses or authorizations on a timely basis, if at all; imposition of new or increases in tariffs and any retaliatory measures; the effects of geopolitical turmoil or conflicts; demand for semiconductor chips and electronic devices; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; our ability to meet customer demand, and our suppliers’ ability to meet our demand requirements; the concentrated nature of our customer base; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; cybersecurity incidents affecting our information systems or information contained in them, or affecting our operations, suppliers, customers or vendors; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the effects of regional or global health epidemics; acquisitions, investments and divestitures; changes in income tax laws; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; our ability to ensure compliance with applicable law, rules and regulations and other risks and uncertainties described in our SEC filings, including our recent Forms 10-K and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.

    About Applied Materials

    Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible a better future. Learn more at www.appliedmaterials.com.

    Investor Relations Contact:
    Liz Morali (408) 986-7977
    liz_morali@amat.com 

    Media Contact:
    Ricky Gradwohl (408) 235-4676
    ricky_gradwohl@amat.com 

     
    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
      
     Three Months Ended
    (In millions, except per share amounts)January 26,
    2025    		 January 28,
    2024
    Net revenue$7,166  $6,707 
    Cost of products sold 3,670   3,503 
    Gross profit 3,496   3,204 
    Operating expenses:   
    Research, development and engineering 859   754 
    Marketing and selling 206   207 
    General and administrative 256   276 
    Total operating expenses 1,321   1,237 
    Income from operations 2,175   1,967 
    Interest expense 64   59 
    Interest and other income (expense), net 8   395 
    Income before income taxes 2,119   2,303 
    Provision for income taxes 934   284 
    Net income$1,185  $2,019 
    Earnings per share:   
    Basic$1.46  $2.43 
    Diluted$1.45  $2.41 
    Weighted average number of shares:   
    Basic 814   831 
    Diluted 819   837 
            


     
    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
        
    (In millions)January 26,
    2025    		 October 27,
    2024
    ASSETS   
    Current assets:   
    Cash and cash equivalents$6,264  $8,022 
    Short-term investments 1,949   1,449 
    Accounts receivable, net 5,998   5,234 
    Inventories 5,501   5,421 
    Other current assets 982   1,094 
    Total current assets 20,694   21,220 
    Long-term investments 2,686   2,787 
    Property, plant and equipment, net 3,563   3,339 
    Goodwill 3,768   3,732 
    Purchased technology and other intangible assets, net 237   249 
    Deferred income taxes and other assets 2,390   3,082 
    Total assets$33,338  $34,409 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Short-term debt$799  $799 
    Accounts payable and accrued expenses 4,485   4,820 
    Contract liabilities 2,452   2,849 
    Total current liabilities 7,736   8,468 
    Long-term debt 5,461   5,460 
    Income taxes payable 684   670 
    Other liabilities 832   810 
    Total liabilities 14,713   15,408 
    Total stockholders’ equity 18,625   19,001 
    Total liabilities and stockholders’ equity$33,338  $34,409 
            


     
    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
      
     Three Months Ended
    (In millions)
    		January 26,
    2025    		 January 28,
    2024
    Cash flows from operating activities:   
    Net income$1,185  $2,019 
    Adjustments required to reconcile net income to cash provided by operating activities:   
    Depreciation and amortization 105   91 
    Share-based compensation 195   170 
    Deferred income taxes 668   (72)
    Other 95   (235)
    Net change in operating assets and liabilities (1,323)  352 
    Cash provided by operating activities 925   2,325 
    Cash flows from investing activities:   
    Capital expenditures (381)  (229)
    Cash paid for acquisitions, net of cash acquired (28)  — 
    Proceeds from sales and maturities of investments 1,223   531 
    Purchases of investments (1,711)  (749)
    Cash used in investing activities (897)  (447)
    Cash flows from financing activities:   
    Proceeds from issuance of commercial paper 200   100 
    Repayments of commercial paper (200)  (100)
    Common stock repurchases (1,318)  (700)
    Tax withholding payments for vested equity awards (142)  (192)
    Payments of dividends to stockholders (326)  (266)
    Repayments of principal on finance leases —   1 
    Cash used in financing activities (1,786)  (1,157)
    Increase (decrease) in cash, cash equivalents and restricted cash equivalents (1,758)  721 
    Cash, cash equivalents and restricted cash equivalents—beginning of period 8,113   6,233 
    Cash, cash equivalents and restricted cash equivalents — end of period$6,355  $6,954 
        
    Reconciliation of cash, cash equivalents, and restricted cash equivalents   
    Cash and cash equivalents$6,264  $6,854 
    Restricted cash equivalents included in deferred income taxes and other assets 91   100 
    Total cash, cash equivalents, and restricted cash equivalents$6,355  $6,954 
        
    Supplemental cash flow information:   
    Cash payments for income taxes$70  $139 
    Cash refunds from income taxes$70  $2 
    Cash payments for interest$52  $34 
            

    Additional Information

     Q1 FY2025 Q1 FY2024
    Net Revenue by Geography (In millions) 
    United States$917  $759 
    % of Total 13%  11%
    Europe$330  $410 
    % of Total 4%  6%
    Japan$540  $565 
    % of Total 8%  9%
    Korea$1,667  $1,231 
    % of Total 23%  18%
    Taiwan$1,183  $559 
    % of Total 17%  8%
    Southeast Asia$286  $186 
    % of Total 4%  3%
    China$2,243  $2,997 
    % of Total 31%  45%
        
    Employees(In thousands)   
    Regular Full Time 36.0   34.5 
            


     
    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
      
     Three Months Ended
    (In millions, except percentages)January 26,
    2025    		 January 28,
    2024
    Non-GAAP Gross Profit   
    GAAP reported gross profit$3,496  $3,204 
    Certain items associated with acquisitions1 7   7 
    Non-GAAP gross profit$3,503  $3,211 
    Non-GAAP gross margin 48.9%  47.9%
    Non-GAAP Operating Income   
    GAAP reported operating income$2,175  $1,967 
    Certain items associated with acquisitions1 12   11 
    Acquisition integration and deal costs 3   3 
    Non-GAAP operating income$2,190  $1,981 
    Non-GAAP operating margin 30.6%  29.5%
    Non-GAAP Net Income   
    GAAP reported net income$1,185  $2,019 
    Certain items associated with acquisitions1 12   11 
    Acquisition integration and deal costs 3   3 
    Realized loss (gain), dividends and impairments on strategic investments, net (9)  (1)
    Unrealized loss (gain) on strategic investments, net 106   (280)
    Income tax effect of share-based compensation2 (10)  (26)
    Income tax effects related to intra-entity intangible asset transfers3 674   22 
    Resolution of prior years’ income tax filings and other tax items (16)  33 
    Income tax effect of non-GAAP adjustments4 1   1 
    Non-GAAP net income$1,946  $1,782 


    1These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
      
    2GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
      
    3Amount for the three months ended January 26, 2025, included changes to income tax provision of $30 million from amortization of intangibles and a $644 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in fiscal 2025.
      
    4Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.
      


     
    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
      
     Three Months Ended
    (In millions, except per share amounts)January 26,
    2025    		 January 28,
    2024
    Non-GAAP Earnings Per Diluted Share   
    GAAP reported earnings per diluted share$1.45  $2.41 
    Certain items associated with acquisitions 0.01   0.01 
    Realized loss (gain), dividends and impairments on strategic investments, net (0.01)  — 
    Unrealized loss (gain) on strategic investments, net 0.13   (0.33)
    Income tax effect of share-based compensation (0.01)  (0.03)
    Income tax effects related to intra-entity intangible asset transfers1 0.83   0.03 
    Resolution of prior years’ income tax filings and other tax items (0.02)  0.04 
    Non-GAAP earnings per diluted share$2.38  $2.13 
    Weighted average number of diluted shares 819   837 


    1Amount for the three months ended January 26, 2025, included changes to income tax provision of $0.04 per diluted share from amortization of intangibles and $0.79 per diluted share from a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in fiscal 2025.
      


     
    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
      
     Three Months Ended
    (In millions, except percentages)January 26,
    2025    		 January 28,
    2024
    Semiconductor Systems Non-GAAP Operating Income   
    GAAP reported operating income$1,986  $1,744 
    Certain items associated with acquisitions1 12   10 
    Non-GAAP operating income$1,998  $1,754 
    Non-GAAP operating margin 37.3%  35.7%
    Applied Global Services Non-GAAP Operating Income   
    GAAP reported operating income$447  $417 
    Non-GAAP operating income$447  $417 
    Non-GAAP operating margin 28.0%  28.3%
    Display Non-GAAP Operating Income   
    GAAP reported operating income$14  $25 
    Non-GAAP operating income$14  $25 
    Non-GAAP operating margin 7.7%  10.2%


    1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
      

    Note: The reconciliation of GAAP and non-GAAP segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.

     
    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
      
     Three Months Ended
    (In millions, except percentages)January 26, 2025
      
    GAAP provision for income taxes (a)$934 
    Income tax effect of share-based compensation 10 
    Income tax effects related to intra-entity intangible asset transfers (674)
    Resolutions of prior years’ income tax filings and other tax items 16 
    Income tax effect of non-GAAP adjustments (1)
    Non-GAAP provision for income taxes (b)$285 
      
    GAAP income before income taxes (c)$2,119 
    Certain items associated with acquisitions 12 
    Acquisition integration and deal costs 3 
    Realized loss (gain), dividends and impairments on strategic investments, net (9)
    Unrealized loss (gain) on strategic investments, net 106 
    Non-GAAP income before income taxes (d)$2,231 
      
    GAAP effective income tax rate (a/c) 44.1%
      
    Non-GAAP effective income tax rate (b/d) 12.8%
        


     
    UNAUDITED RECONCILIATION OF NON-GAAP FREE CASH FLOW
      
     Three Months Ended
    (In millions)January 26,
    2025    		 January 28,
    2024
    Cash provided by operating activities$925  $2,325 
    Capital expenditures (381)  (229)
    Non-GAAP free cash flow$544  $2,096 
            

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