Applied Materials Announces Third Quarter 2025 Results

August 14, 2025 16:01 ET | Source: Applied Materials, Inc. Record revenue $7.30 billion, up 8 percent year over yearGAAP gross margin 48.8 percent and non-GAAP gross margin 48.9 percentGAAP operating margin 30.6 percent and non-GAAP operating margin 30.7 percentGAAP EPS $2.22 and record non-GAAP EPS $2.48, up 8 percent and 17 percent year over year, respectively SANTA CLARA, Calif., Aug. 14, 2025 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its third quarter ended Jul. 27, 2025. “Applied Materials delivered record performance in our third fiscal quarter, and we are on track to deliver our sixth consecutive year of revenue growth in fiscal 2025,” said Gary Dickerson, President and CEO. “We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term, including for our China business. Despite this, we remain very confident in the longer-term growth opportunities for the semiconductor industry and Applied Materials.” “We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing,” said Brice Hill, Senior Vice President and CFO. “We are navigating and adapting to the near-term uncertainties by leveraging our robust supply chain, global manufacturing footprint and deep customer relationships.” Results Summary Q3 FY2025 Q3 FY2024 Change (In millions, except per share amounts and percentages)Net revenue$7,302 $6,778 8%Gross margin 48.8% 47.3% 1.5 pointsOperating margin 30.6% 28.7% 1.9 pointsNet income$1,779 $1,705 4%Diluted earnings per share$2.22 $2.05 8%Non-GAAP Results Non-GAAP gross margin 48.9% 47.4% 1.5 pointsNon-GAAP operating margin 30.7% 28.8% 1.9 pointsNon-GAAP net income$1,989 $1,767 13%Non-GAAP diluted EPS$2.48 $2.12 17%Non-GAAP free cash flow$2,050 $2,088 (2)% 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 fourth quarter of fiscal 2025 are expected to be approximately as follows: Q4 FY2025(In millions, except percentage and per share amounts) Total net revenue $6,700 +/-$500Non-GAAP gross margin 48.1% Non-GAAP diluted EPS $2.11 +/-$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. Third Quarter Reportable Segment Information Semiconductor SystemsQ3 FY2025 Q3 FY2024(in millions, except percentages) Net revenue$5,427 $4,924 Foundry, logic and other 69% 72%DRAM 22% 24%Flash memory 9% 4%Operating income$1,966 $1,712 Operating margin 36.2% 34.8%Non-GAAP Results Non-GAAP operating income$1,977 $1,722 Non-GAAP operating margin 36.4% 35.0% Applied Global ServicesQ3 FY2025 Q3 FY2024(in millions, except percentages) Net revenue$1,600 $1,580 Operating income$445 $467 Operating margin 27.8% 29.6%Non-GAAP Results Non-GAAP operating income$445 $467 Non-GAAP operating margin 27.8% 29.6% DisplayQ3 FY2025 Q3 FY2024(in millions, except percentages) Net revenue$263 $251 Operating income$62 $16 Operating margin 23.6% 6.4%Non-GAAP Results Non-GAAP operating income$62 $16 Non-GAAP operating margin 23.6% 6.4% Corporate and OtherQ3 FY2025 Q3 FY2024(in millions) Unallocated net revenue$12 $23 Unallocated cost of products sold and expenses (252) (276)Total$(240) $(253) 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 fourth 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 that are at the foundation of virtually every new semiconductor and advanced display in the world. The technology we create is essential to advancing AI and accelerating the commercialization of next-generation chips. At Applied, we push the boundaries of science and engineering to deliver material innovation that changes the world. 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 Nine Months Ended(In millions, except per share amounts)July 27,2025 July 28,2024 July 27,2025 July 28,2024Net revenue$7,302 $6,778 $21,568 $20,131Cost of products sold 3,740 3,573 11,025 10,569Gross profit 3,562 3,205 10,543 9,562Operating expenses: Research, development and engineering 901 836 2,653 2,375Marketing and selling 224 205 646 621General and administrative 204 222 667 745Total operating expenses 1,329 1,263 3,966 3,741Income from operations 2,233 1,942 6,577 5,821Interest expense 66 63 198 181Interest and other income (expense), net 396 81 625 617Income before income taxes 2,563 1,960 7,004 6,257Provision for income taxes 784 255 1,903 811Net income$1,779 $1,705 $5,101 $5,446Earnings per share: Basic$2.23 $2.06 $6.32 $6.57Diluted$2.22 $2.05 $6.29 $6.52Weighted average number of shares: Basic 798 826 807 829Diluted 802 833 811 835 APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In millions)July 27,2025 October 27,2024ASSETS Current assets: Cash and cash equivalents$5,384 $8,022Short-term investments 1,630 1,449Accounts receivable, net 5,772 5,234Inventories 5,807 5,421Other current assets 1,125 1,094Total current assets 19,718 21,220Long-term investments 4,133 2,787Property, plant and equipment, net 4,124 3,339Goodwill 3,748 3,732Purchased technology and other intangible assets, net 238 249Deferred income taxes and other assets 2,250 3,082Total assets$34,211 $34,409LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt$799 $799Accounts payable and accrued expenses 4,614 4,820Contract liabilities 2,470 2,849Total current liabilities 7,883 8,468Long-term debt 5,463 5,460Income taxes payable 330 670Other liabilities 1,031 810Total liabilities 14,707 15,408Total stockholders’ equity 19,504 19,001Total liabilities and stockholders’ equity$34,211 $34,409 APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In millions)Three Months Ended Nine Months EndedJuly 27,2025 July 28,2024July 27,2025 July 28,2024Cash flows from operating activities: Net income$1,779 $1,705 $5,101 $5,446 Adjustments required to reconcile net income to cash provided by operating activities: Depreciation and amortization 113 95 321 282 Share-based compensation 158 132 512 436 Deferred income taxes 280 (179) 952 (385)Other (284) 48 (298) (199)Net change in operating assets and liabilities 588 584 (1,458) 522 Cash provided by operating activities 2,634 2,385 5,130 6,102 Cash flows from investing activities: Capital expenditures (584) (297) (1,475) (783)Cash paid for acquisitions, net of cash acquired — — (29) — Proceeds from asset sale — — 33 — Proceeds from sales and maturities of investments 793 382 3,937 1,495 Purchases of investments (2,176) (745) (5,109) (1,968)Cash used in investing activities (1,967) (660) (2,643) (1,256)Cash flows from financing activities: Debt borrowings, net of issuance costs — 694 — 694 Proceeds from issuance of commercial paper 100 100 400 300 Repayments of commercial paper (100) (100) (400) (300)Proceeds from common stock issuances — — 129 119 Common stock repurchases (1,056) (861) (4,044) (2,381)Tax withholding payments for vested equity awards (33) (25) (210) (258)Payments of dividends to stockholders (368) (331) (1,019) (863)Payments of debt issuance costs — — (2) — Repayments of principal on finance leases — 1 — (12)Cash used in financing activities (1,457) (522) (5,146) (2,701)Increase (decrease) in cash, cash equivalents and restricted cash equivalents (790) 1,203 (2,659) 2,145 Cash, cash equivalents and restricted cash equivalents—beginning of period 6,244 7,175 8,113 6,233 Cash, cash equivalents and restricted cash equivalents — end of period$5,454 $8,378 $5,454 $8,378 Reconciliation of cash, cash equivalents, and restricted cash equivalents Cash and cash equivalents$5,384 $8,288 $5,384 $8,288 Restricted cash equivalents included in deferred income taxes and other assets 70 90 70 90 Total cash, cash equivalents, and restricted cash equivalents$5,454 $8,378 $5,454 $8,378 Supplemental cash flow information: Cash payments for income taxes$436 $213 $1,269 $819 Cash refunds from income taxes$4 $2 $79 $7 Cash payments for interest$51 $35 $171 $137 Additional Information Q3 FY2025 Q3 FY2024Net Revenue by Geography (In millions) United States$683 $1,053 % of Total 9% 16%Europe$160 $339 % of Total 2% 5%Japan$713 $555 % of Total 10% 8%Korea$1,160 $1,102 % of Total 16% 16%Taiwan$1,843 $1,148 % of Total 25% 17%Southeast Asia$195 $428 % of Total 3% 6%China$2,548 $2,153 % of Total 35% 32% Employees(In thousands) Regular Full Time 36.1 35.2 APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Nine Months Ended(In millions, except percentages)July 27,2025 July 28,2024 July 27,2025 July 28,2024Non-GAAP Gross Profit GAAP reported gross profit$3,562 $3,205 $10,543 $9,562 Certain items associated with acquisitions1 7 6 20 20 Non-GAAP gross profit$3,569 $3,211 $10,563 $9,582 Non-GAAP gross margin 48.9% 47.4% 49.0% 47.6%Non-GAAP Operating Income GAAP reported operating income$2,233 $1,942 $6,577 $5,821 Certain items associated with acquisitions1 11 10 34 31 Acquisition integration and deal costs 1 1 4 9 Non-GAAP operating income$2,245 $1,953 $6,615 $5,861 Non-GAAP operating margin 30.7% 28.8% 30.7% 29.1%Non-GAAP Net Income GAAP reported net income$1,779 $1,705 $5,101 $5,446 Certain items associated with acquisitions1 11 10 34 31 Acquisition integration and deal costs 1 1 4 9 Realized loss (gain), dividends and impairments on strategic investments, net 16 16 (11) 12 Unrealized loss (gain) on strategic investments, net (314) 25 (288) (275)Foreign exchange loss (gain) related to purchase of strategic investment — — 23 — Loss (gain) on asset sale — — (44) — Income tax effect of share-based compensation2 7 8 1 (7)Income tax effects related to intra-entity intangible asset transfers3 32 17 738 57 Resolution of prior years’ income tax filings and other tax items4 460 (11) 320 22 Income tax effect of non-GAAP adjustments5 (3) (4) (3) (2)Non-GAAP net income$1,989 $1,767 $5,875 $5,293 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 nine months ended July 27, 2025, included changes to income tax provision of $94 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. 4Amounts for the three and nine months ended July 27, 2025 included the impact of the recognition of a $410 million valuation allowance against deferred tax assets related to corporate alternative minimum tax credits. 5Adjustment 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 Nine Months Ended(In millions, except per share amounts)July 27,2025 July 28,2024 July 27,2025 July 28,2024Non-GAAP Earnings Per Diluted Share GAAP reported earnings per diluted share$2.22 $2.05 $6.29 $6.52 Certain items associated with acquisitions 0.01 0.01 0.04 0.04 Acquisition integration and deal costs — — — 0.01 Realized loss (gain), dividends and impairments on strategic investments, net 0.02 0.01 (0.02) 0.01 Unrealized loss (gain) on strategic investments, net (0.39) 0.03 (0.36) (0.33)Foreign exchange loss (gain) related to purchase of strategic investment — — 0.03 — Loss (gain) on asset sale — — (0.04) — Income tax effect of share-based compensation 0.01 0.01 — (0.01)Income tax effects related to intra-entity intangible asset transfers1 0.04 0.02 0.91 0.07 Resolution of prior years’ income tax filings and other tax items2 0.57 (0.01) 0.40 0.03 Non-GAAP earnings per diluted share$2.48 $2.12 $7.25 $6.34 Weighted average number of diluted shares 802 833 811 835 1Amount for the nine months ended July 27, 2025, included changes to income tax provision of $0.12 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. 2Amounts for the three and nine months ended July 27, 2025 included a $0.51 per diluted share impact of the recognition of a valuation allowance against deferred tax assets related to corporate alternative minimum tax credits. APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS Three Months Ended Nine Months Ended(In millions, except percentages)July 27,2025 July 28,2024 July 27,2025 July 28,2024Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income$1,966 $1,712 $5,852 $5,157 Certain items associated with acquisitions1 11 10 34 30 Non-GAAP operating income$1,977 $1,722 $5,886 $5,187 Non-GAAP operating margin 36.4% 35.0% 36.7% 35.2%Applied Global Services Non-GAAP Operating Income GAAP reported operating income$445 $467 $1,338 $1,320 Non-GAAP operating income$445 $467 $1,338 $1,320 Non-GAAP operating margin 27.8% 29.6% 28.1% 28.8%Display Non-GAAP Operating Income GAAP reported operating income$62 $16 $144 $46 Non-GAAP operating income$62 $16 $144 $46 Non-GAAP operating margin 23.6% 6.4% 20.4% 6.8% 1These 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)July 27, 2025 GAAP provision for income taxes(a)$784 Income tax effect of share-based compensation (7)Income tax effects related to intra-entity intangible asset transfers (32)Resolutions of prior years’ income tax filings and other tax items (460)Income tax effect of non-GAAP adjustments 3 Non-GAAP provision for income taxes(b)$288 GAAP income before income taxes(c)$2,563 Certain items associated with acquisitions 11 Acquisition integration and deal costs 1 Realized loss (gain), dividends and impairments on strategic investments, net 16 Unrealized loss (gain) on strategic investments, net (314)Non-GAAP income before income taxes(d)$2,277 GAAP effective income tax rate(a/c) 30.6% Non-GAAP effective income tax rate(b/d) 12.6% UNAUDITED RECONCILIATION OF NON-GAAP FREE CASH FLOW Three Months Ended Nine Months Ended(In millions)July 27,2025 July 28,2024 July 27,2025 July 28,2024Cash provided by operating activities$2,634 $2,385 $5,130 $6,102 Capital expenditures (584) (297) (1,475) (783)Non-GAAP free cash flow$2,050 $2,088 $3,655 $5,319

Applied Materials Announces Third Quarter 2025 Results

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