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Applied Materials Announces First Quarter 2025 Results

1. AMAT reported Q1 FY2025 revenue at $7.17 billion, up 7% YoY. 2. Q1 GAAP EPS fell 40% to $1.45; non-GAAP EPS rose 12% to $2.38. 3. Strong cash flow of $925 million from operations; $1.64 billion returned to shareholders. 4. New Singapore tax incentives impacted results with $644 million tax expense. 5. Expect Q2 revenue of $7.1 billion amid export regulation challenges.

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Why Bullish?

AMAT's revenue growth and robust cash distribution are positive signs. Similar past performance boosted AMAT's stock in previous quarters, indicating investor support.

How important is it?

The article details significant financial metrics impacting AMAT's performance, driving investor interest.

Why Short Term?

Near-term growth driven by strong Q1 results may influence immediate investor sentiment. The potential for export challenges could moderate long-term impacts.

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February 13, 2025 16:01 ET  | Source: Applied Materials, Inc. Revenue $7.17 billion, up 7 percent year over yearGAAP gross margin 48.8 percent and non-GAAP gross margin 48.9 percentGAAP operating margin 30.4 percent and non-GAAP operating margin 30.6 percentGAAP EPS $1.45 and non-GAAP EPS $2.38, down 40 percent and up 12 percent year over year, respectivelyGenerated $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 pointOperating margin 30.4%  29.3% 1.1 pointsNet 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 pointNon-GAAP operating margin 30.6%  29.5% 1.1 pointsNon-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 StatementsThis 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) 986-7977liz_morali@amat.com  Media Contact:Ricky Gradwohl (408) 235-4676ricky_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 28,2024Net 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 27,2024ASSETS   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 28,2024Cash 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 FY2024Net 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 28,2024Non-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 28,2024Non-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 28,2024Semiconductor 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 28,2024Cash provided by operating activities$925  $2,325 Capital expenditures (381)  (229)Non-GAAP free cash flow$544  $2,096         

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