Lam Research Corp (LRCX) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amid Industry ...

GuruFocus News
3 min read

In This Article:

  • Revenue: $4.17 billion for the September quarter, an 8% increase from the prior quarter.

  • Gross Margin: 48.2%, exceeding the guided range.

  • Operating Margin: 30.9%, above the high end of the guidance range.

  • Free Cash Flow: $1.46 billion, representing 35% of revenue.

  • Deferred Revenue: $2.05 billion, an increase of $495 million from the June quarter.

  • Customer Support Business Group Revenue: Approximately $1.8 billion, up 4% from the June quarter.

  • China Revenue Contribution: 37% of total revenue, down from 39% in the prior quarter.

  • Dividends Paid: $261 million in the September quarter.

  • Share Repurchases: Approximately $1 billion allocated to open market share repurchases.

  • Cash and Cash Equivalents: $6.1 billion at the end of the September quarter.

  • Inventory: $4.2 billion, with inventory turns improving to 2.1 times.

  • Capital Expenditures: $111 million for the September quarter.

  • Headcount: Approximately 17,700 regular full-time employees, an increase of about 500 from the prior quarter.

Release Date: October 23, 2024

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

Positive Points

  • Lam Research Corp (NASDAQ:LRCX) posted a strong September quarter with revenues and earnings per share exceeding the midpoint of guidance.

  • The company achieved its fifth consecutive quarter of revenue growth, indicating strong execution despite a challenging industry environment.

  • Lam Research Corp (NASDAQ:LRCX) is well-positioned to benefit from technology upgrades in NAND, which is expected to drive spending recovery.

  • The company is seeing strong momentum in advanced packaging, with SABRE 3D revenue more than doubling this year.

  • Lam Research Corp (NASDAQ:LRCX) is experiencing strong customer demand for productivity enhancements and equipment intelligence services, with increased adoption of its offerings.

Negative Points

  • Domestic China WFE is expected to decline in the second half of the year, impacting Lam Research Corp (NASDAQ:LRCX)'s revenue from the region.

  • Gross margin decreased slightly due to a decline in customer mix and increased incentive compensation.

  • Operating expenses increased due to higher program spending and incentive compensation, impacting profitability.

  • The NAND segment has experienced a prolonged down cycle, with spending expected to increase only in 2025.

  • Lam Research Corp (NASDAQ:LRCX) anticipates a headwind in customer mix affecting gross margins due to a lower percentage of revenue from China.

Q & A Highlights

Q: Can you discuss the outlook for 2025 WFE, particularly in relation to China? A: Timothy Archer, CEO: We expect overall WFE to be up next year, but specifically, China WFE will be lower. China's share of Lam's total revenue is expected to decrease next year compared to this year. More details will be provided in January.

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