Applied Materials Announces Second Quarter 2025 Results

May 15, 2025 16:01 ET | Source: Applied Materials, Inc. Revenue $7.10 billion, up 7 percent year over yearGAAP gross margin 49.1 percent and non-GAAP gross margin 49.2 percentGAAP operating margin 30.5 percent and non-GAAP operating margin 30.7 percentRecord GAAP EPS $2.63 and record non-GAAP EPS $2.39, up 28 percent and 14 percent year over year, respectivelyGenerated $1.57 billion in cash from operations and distributed $2.00 billion to shareholders including $1.67 billion in share repurchases and $325 million in dividends SANTA CLARA, Calif., May 15, 2025 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its second quarter ended Apr. 27, 2025. “Applied Materials’ broad capabilities and connected product portfolio are driving strong results in 2025 amidst a highly dynamic macro environment,” said Gary Dickerson, President and CEO. “High-performance, energy-efficient AI computing remains the dominant driver of semiconductor innovation, and Applied is working closely with our customers and partners to accelerate the industry’s roadmap. We are very well positioned at major technology inflections in fast-growing areas of the market, which supports our multi-year growth trajectory.” “We delivered strong performance in our second fiscal quarter with seven percent year-over-year revenue growth, record earnings per share and shareholder distributions of nearly $2 billion,” said Brice Hill, Senior Vice President and CFO. “Despite the dynamic economic and trade environment, we have not seen significant changes to customer demand and are well-equipped to navigate evolving conditions with our robust global supply chain and diversified manufacturing footprint.” Results Summary Q2 FY2025 Q2 FY2024 Change (In millions, except per share amounts and percentages)Net revenue$7,100 $6,646 7%Gross margin 49.1% 47.4% 1.7 pointsOperating margin 30.5% 28.8% 1.7 pointsNet income$2,137 $1,722 24%Diluted earnings per share$2.63 $2.06 28%Non-GAAP Results Non-GAAP gross margin 49.2% 47.5% 1.7 pointsNon-GAAP operating margin 30.7% 29.0% 1.7 pointsNon-GAAP net income$1,940 $1,744 11%Non-GAAP diluted EPS$2.39 $2.09 14%Non-GAAP free cash flow$1,061 $1,135 (7)% 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. Business Outlook Applied’s total net revenue, non-GAAP gross margin and non-GAAP diluted EPS for the third quarter of fiscal 2025 are expected to be approximately as follows: Q3 FY2025(In millions, except percentage and per share amounts) Total net revenue$7,200 +/- $500 Non-GAAP gross margin 48.3% Non-GAAP diluted EPS$2.35 +/- $0.20 This outlook for non-GAAP diluted EPS excludes known charges related to completed acquisitions of $0.01 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. Second Quarter Reportable Segment Information Semiconductor SystemsQ2 FY2025 Q2 FY2024(in millions, except percentages) Net revenue$5,255 $4,901 Foundry, logic and other 65% 65%DRAM 27% 32%Flash memory 8% 3%Operating income$1,900 $1,701 Operating margin 36.2% 34.7%Non-GAAP Results Non-GAAP operating income$1,911 $1,711 Non-GAAP operating margin 36.4% 34.9% Applied Global ServicesQ2 FY2025 Q2 FY2024(in millions, except percentages) Net revenue$1,566 $1,530 Operating income$446 $436 Operating margin 28.5% 28.5%Non-GAAP Results Non-GAAP operating income$446 $436 Non-GAAP operating margin 28.5% 28.5% DisplayQ2 FY2025 Q2 FY2024(in millions, except percentages) Net revenue$259 $179 Operating income$68 $5 Operating margin 26.3% 2.8%Non-GAAP Results Non-GAAP operating income$68 $5 Non-GAAP operating margin 26.3% 2.8% Corporate and OtherQ2 FY2025 Q2 FY2024(in millions) Unallocated net revenue$20 $36 Unallocated cost of products sold and expenses (265) (266)Total$(245) $(230) 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 third 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, including their impact on demand for our products and services; our ability to effectively mitigate the impact of tariffs; 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-Q 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 Six Months Ended(In millions, except per share amounts)April 27,2025 April 28,2024 April 27,2025 April 28,2024Net revenue$7,100 $6,646 $14,266 $13,353 Cost of products sold 3,615 3,493 7,285 6,996 Gross profit 3,485 3,153 6,981 6,357 Operating expenses: Research, development and engineering 893 785 1,752 1,539 Marketing and selling 216 209 422 416 General and administrative 207 247 463 523 Total operating expenses 1,316 1,241 2,637 2,478 Income from operations 2,169 1,912 4,344 3,879 Interest expense 68 59 132 118 Interest and other income (expense), net 221 141 229 536 Income before income taxes 2,322 1,994 4,441 4,297 Provision for income taxes 185 272 1,119 556 Net income$2,137 $1,722 $3,322 $3,741 Earnings per share: Basic$2.64 $2.08 $4.10 $4.50 Diluted$2.63 $2.06 $4.08 $4.47 Weighted average number of shares: Basic 809 830 811 831 Diluted 812 836 815 837 APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In millions)April 27,2025 October 27,2024ASSETS Current assets: Cash and cash equivalents$6,169 $8,022 Short-term investments 578 1,449 Accounts receivable, net 6,187 5,234 Inventories 5,656 5,421 Other current assets 1,118 1,094 Total current assets 19,708 21,220 Long-term investments 3,638 2,787 Property, plant and equipment, net 3,832 3,339 Goodwill 3,748 3,732 Purchased technology and other intangible assets, net 249 249 Deferred income taxes and other assets 2,457 3,082 Total assets$33,632 $34,409 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt$799 $799 Accounts payable and accrued expenses 4,706 4,820 Contract liabilities 2,491 2,849 Total current liabilities 7,996 8,468 Long-term debt 5,462 5,460 Income taxes payable 321 670 Other liabilities 892 810 Total liabilities 14,671 15,408 Total stockholders’ equity 18,961 19,001 Total liabilities and stockholders’ equity$33,632 $34,409 APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended(In millions)April 27,2025 April 28,2024April 27,2025 April 28,2024Cash flows from operating activities: Net income$2,137 $1,722 $3,322 $3,741 Adjustments required to reconcile net income to cash provided by operating activities: Depreciation and amortization 103 96 208 187 Share-based compensation 159 134 354 304 Deferred income taxes 4 (134) 672 (206)Other (109) (12) (14) (247)Net change in operating assets and liabilities (723) (414) (2,046) (62)Cash provided by operating activities 1,571 1,392 2,496 3,717 Cash flows from investing activities: Capital expenditures (510) (257) (891) (486)Cash paid for acquisitions, net of cash acquired (1) — (29) — Proceeds from asset sale 33 — 33 — Proceeds from sales and maturities of investments 1,921 582 3,144 1,113 Purchases of investments (1,222) (474) (2,933) (1,223)Cash provided by (used in) investing activities 221 (149) (676) (596)Cash flows from financing activities: Proceeds from issuance of commercial paper 100 100 300 200 Repayments of commercial paper (100) (100) (300) (200)Proceeds from common stock issuances 129 119 129 119 Common stock repurchases (1,670) (820) (2,988) (1,520)Tax withholding payments for vested equity awards (35) (41) (177) (233)Payments of dividends to stockholders (325) (266) (651) (532)Payments of debt issuance costs (2) — (2) — Repayments of principal on finance leases — (14) — (13)Cash used in financing activities (1,903) (1,022) (3,689) (2,179)Increase (decrease) in cash, cash equivalents and restricted cash equivalents (111) 221 (1,869) 942 Cash, cash equivalents and restricted cash equivalents—beginning of period 6,355 6,954 8,113 6,233 Cash, cash equivalents and restricted cash equivalents — end of period$6,244 $7,175 $6,244 $7,175 Reconciliation of cash, cash equivalents, and restricted cash equivalents Cash and cash equivalents$6,169 $7,085 $6,169 $7,085 Restricted cash equivalents included in deferred income taxes and other assets 75 90 75 90 Total cash, cash equivalents, and restricted cash equivalents$6,244 $7,175 $6,244 $7,175 Supplemental cash flow information: Cash payments for income taxes$763 $467 $833 $606 Cash refunds from income taxes$5 $3 $75 $5 Cash payments for interest$68 $68 $120 $102 Additional Information Q2 FY2025 Q2 FY2024Net Revenue by Geography (In millions) United States$808 $853 % of Total 11% 13%Europe$252 $289 % of Total 4% 4%Japan$572 $453 % of Total 8% 7%Korea$1,562 $988 % of Total 22% 15%Taiwan$1,997 $1,019 % of Total 28% 15%Southeast Asia$135 $213 % of Total 2% 3%China$1,774 $2,831 % of Total 25% 43% Employees(In thousands) Regular Full Time 36.0 34.8 APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Six Months Ended(In millions, except percentages)April 27,2025 April 28,2024 April 27,2025 April 28,2024Non-GAAP Gross Profit GAAP reported gross profit$3,485 $3,153 $6,981 $6,357 Certain items associated with acquisitions1 6 7 13 14 Non-GAAP gross profit$3,491 $3,160 $6,994 $6,371 Non-GAAP gross margin 49.2% 47.5% 49.0% 47.7%Non-GAAP Operating Income GAAP reported operating income$2,169 $1,912 $4,344 $3,879 Certain items associated with acquisitions1 11 10 23 21 Acquisition integration and deal costs — 5 3 8 Non-GAAP operating income$2,180 $1,927 $4,370 $3,908 Non-GAAP operating margin 30.7% 29.0% 30.6% 29.3%Non-GAAP Net Income GAAP reported net income$2,137 $1,722 $3,322 $3,741 Certain items associated with acquisitions1 11 10 23 21 Acquisition integration and deal costs — 5 3 8 Realized loss (gain), dividends and impairments on strategic investments, net (18) (3) (27) (4)Unrealized loss (gain) on strategic investments, net (80) (20) 26 (300)Foreign exchange loss (gain) related to purchase of strategic investment 23 — 23 — Loss (gain) on asset sale (44) — (44) — Income tax effect of share-based compensation2 4 11 (6) (15)Income tax effects related to intra-entity intangible asset transfers3 32 18 706 40 Resolution of prior years’ income tax filings and other tax items (124) — (140) 33 Income tax effect of non-GAAP adjustments4 (1) 1 — 2 Non-GAAP net income$1,940 $1,744 $3,886 $3,526 1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. 2 GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis. 3 Amount for the six months ended April 27, 2025, included changes to income tax provision of $62 million from amortization of intangibles and a $644 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in the first quarter of fiscal 2025. 4 Adjustment 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 Six Months Ended(In millions, except per share amounts)April 27,2025 April 28,2024 April 27,2025 April 28,2024Non-GAAP Earnings Per Diluted Share GAAP reported earnings per diluted share$2.63 $2.06 $4.08 $4.47 Certain items associated with acquisitions 0.01 0.01 0.02 0.02 Acquisition integration and deal costs — 0.01 — 0.01 Realized loss (gain), dividends and impairments on strategic investments, net (0.02) — (0.03) — Unrealized loss (gain) on strategic investments, net (0.10) (0.02) 0.03 (0.36)Foreign exchange loss (gain) related to purchase of strategic investment 0.03 — 0.03 — Loss (gain) on asset sale (0.05) — (0.05) — Income tax effect of share-based compensation — 0.01 (0.01) (0.02)Income tax effects related to intra-entity intangible asset transfers1 0.04 0.02 0.87 0.05 Resolution of prior years’ income tax filings and other tax items (0.15) — (0.17) 0.04 Non-GAAP earnings per diluted share$2.39 $2.09 $4.77 $4.21 Weighted average number of diluted shares 812 836 815 837 1 Amount for the six months ended April 27, 2025, included changes to income tax provision of $0.08 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 the first quarter of fiscal 2025. APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Six Months Ended(In millions, except percentages)April 27,2025 April 28,2024 April 27,2025 April 28,2024Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income$1,900 $1,701 $3,886 $3,445 Certain items associated with acquisitions1 11 10 23 20 Non-GAAP operating income$1,911 $1,711 $3,909 $3,465 Non-GAAP operating margin 36.4% 34.9% 36.8% 35.3%Applied Global Services Non-GAAP Operating Income GAAP reported operating income$446 $436 $893 $853 Non-GAAP operating income$446 $436 $893 $853 Non-GAAP operating margin 28.5% 28.5% 28.3% 28.4%Display Non-GAAP Operating Income GAAP reported operating income$68 $5 $82 $30 Non-GAAP operating income$68 $5 $82 $30 Non-GAAP operating margin 26.3% 2.8% 18.6% 7.1% 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)April 27, 2025 GAAP provision for income taxes (a)$185 Income tax effect of share-based compensation (4)Income tax effects related to intra-entity intangible asset transfers (32)Resolutions of prior years’ income tax filings and other tax items 124 Income tax effect of non-GAAP adjustments 1 Non-GAAP provision for income taxes (b)$274 GAAP income before income taxes (c)$2,322 Certain items associated with acquisitions 11 Realized loss (gain), dividends and impairments on strategic investments, net (18)Unrealized loss (gain) on strategic investments, net (80)Foreign exchange loss (gain) related to purchase of strategic investment 23 Loss (gain) on asset sale (44)Non-GAAP income before income taxes (d)$2,214 GAAP effective income tax rate (a/c) 8.0% Non-GAAP effective income tax rate (b/d) 12.4% UNAUDITED RECONCILIATION OF NON-GAAP FREE CASH FLOW Three Months Ended Six Months Ended(In millions)April 27,2025 April 28,2024 April 27,2025 April 28,2024Cash provided by operating activities$1,571 $1,392 $2,496 $3,717 Capital expenditures (510) (257) (891) (486)Non-GAAP free cash flow$1,061 $1,135 $1,605 $3,231

Applied Materials Announces Second Quarter 2025 Results

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