Applied Materials Inc (AMAT) Q4 2024 Earnings Call Highlights: Record Revenue and Strategic ...

GuruFocus News
4 min read

In This Article:

  • Full Year Revenue: $27.2 billion, up 2.5% year-over-year.

  • Non-GAAP Gross Margin: 47.6%, up 80 basis points year-over-year.

  • Non-GAAP Operating Profit Growth: 2.7% year-over-year.

  • Non-GAAP Earnings Per Share: $8.65, up 7.5% year-over-year.

  • Q4 Revenue: $7.05 billion, up nearly 5% year-over-year.

  • Q4 Non-GAAP Gross Margin: 47.5%.

  • Q4 Non-GAAP Operating Expenses: $1.28 billion or 18.2% of revenue.

  • Q4 Non-GAAP Earnings Per Share: $2.32, up 9% year-over-year.

  • Semiconductor System Sales Q4: $5.18 billion, up 6% year-over-year.

  • Applied Global Services Revenue Q4: $1.64 billion, up 11% year-over-year.

  • Display Business Revenue Q4: $211 million.

  • Cash and Cash Equivalents: $8 billion.

  • Debt: $6.3 billion.

  • Operating Cash Flow: $8.7 billion for fiscal 2024.

  • Free Cash Flow: $7.5 billion for fiscal 2024.

  • Shareholder Distributions: $5 billion for fiscal 2024.

  • Q1 Revenue Outlook: $7.15 billion, plus or minus $400 million.

  • Q1 Non-GAAP EPS Outlook: $2.29, plus or minus $0.18.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Applied Materials Inc (NASDAQ:AMAT) delivered record revenue and earnings in the fourth quarter, marking the fifth consecutive year of growth.

  • The company achieved double-digit growth in its parts and services business, with a high percentage of revenues coming from long-term agreements.

  • AMAT's integrated solutions account for around 30% of semiconductor systems revenue, and this segment is expected to grow further.

  • The company is making significant progress in its EPIC collaborative R&D platform, which is designed to accelerate technology development and commercialization.

  • AMAT's gross margin improved to 47.6% for the fiscal year, the highest since fiscal 2000, driven by operational improvements and value-based pricing.

Negative Points

  • China's revenue contribution declined to 30% in Q4, reflecting a normalization after elevated levels in previous quarters.

  • Non-GAAP operating margin for semiconductor systems was down 50 basis points year-over-year due to a normalizing China mix.

  • The display business experienced lower investment levels due to ongoing weakness in end market demand.

  • There are slower end markets in ICAPS, including automotive, industrial, analog, and image sensors, which could impact future growth.

  • Operating margins in the services business are below prior long-term targets, partly due to increased allocation of corporate expenses.

Q & A Highlights

Q: What are you expecting for China mix as we go through next year, and how does ICAPS strength split between China and the rest of the world? A: Brice Hill, CFO: The China mix was 30% in Q4, and we expect it to remain around 30% in Q1. The ICAPS market is healthy globally, including in China. We expect ICAPS markets to grow over time, with customers continuing to add capacity despite some slower end markets like automotive and industrial.

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