Lam Research(LRCX) - 2025 Q3 - Quarterly Results

Financial Performance Highlights Key Financial Data Overview Lam Research Corporation reported strong financial results for the March 2025 quarter, with significant quarter-over-quarter growth in both U.S. GAAP and Non-GAAP metrics, including revenue, gross margin, operating income, and diluted EPS | U.S. GAAP | March 2025 | December 2024 | Change Q/Q | | :--- | :--- | :--- | :--- | | Revenue | $4,720 million | $4,376 million | +8% | | Gross margin as percentage of revenue | 49.0% | 47.4% | +160 bps | | Operating income as percentage of revenue | 33.1% | 30.5% | +260 bps | | Diluted EPS | $1.03 | $0.92 | +12% | | Non-GAAP | March 2025 | December 2024 | Change Q/Q | | :--- | :--- | :--- | :--- | | Revenue | $4,720 million | $4,376 million | +8% | | Gross margin as percentage of revenue | 49.0% | 47.5% | +150 bps | | Operating income as percentage of revenue | 32.8% | 30.7% | +210 bps | | Diluted EPS | $1.04 | $0.91 | +14% | U.S. GAAP Financial Results For the March 2025 quarter, Lam Research achieved $4,720 million in revenue, a gross margin of 49.0%, and diluted EPS of $1.03, showing an increase across all key metrics compared to the previous quarter | Metric | March 2025 Quarter | December 2024 Quarter | | :--- | :--- | :--- | | Revenue | $4,720 million | $4,376 million | | Gross Margin | $2,314 million (49.0%) | $2,073 million (47.4%) | | Operating Expenses | $752 million | $739 million | | Operating Income | 33.1% of revenue | 30.5% of revenue | | Net Income | $1,331 million | $1,191 million | | Diluted EPS | $1.03 | $0.92 | Non-GAAP Financial Results Non-GAAP results for the March 2025 quarter also demonstrated growth, with gross margin at 49.0%, operating income at 32.8% of revenue, and diluted EPS of $1.04, reflecting improved operational efficiency | Metric | March 2025 Quarter (Non-GAAP) | December 2024 Quarter (Non-GAAP) | | :--- | :--- | :--- | | Gross Margin | $2,312 million (49.0%) | $2,077 million (47.5%) | | Operating Expenses | $763 million | $735 million | | Operating Income | 32.8% of revenue | 30.7% of revenue | | Net Income | $1,336 million | $1,175 million | | Diluted EPS | $1.04 | $0.91 | Management's Strategic Commentary The CEO highlighted Lam Research's compelling portfolio, driving opportunities for market expansion, share gains, and innovative services due to increasing deposition and etch intensity in advanced semiconductor production. Despite near-term tariff uncertainty, the company maintains a strong outlook and confidence in outperforming industry growth - Lam's portfolio is driving opportunities to expand addressable market, gain share, and deliver innovative services as deposition and etch intensity increases in advanced semiconductor production[6] - The company's outlook remains strong despite near-term tariff-related uncertainty, with high confidence in outperforming semiconductor industry growth[6] Financial Position & Cash Flow Balance Sheet Overview Cash, cash equivalents, and restricted cash decreased to $5.5 billion at the end of March 2025, primarily due to capital return activities, debt payments, and capital expenditures, partially offset by operating cash generation | Metric | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $5.5 billion | $5.7 billion | - The decrease in cash balances was primarily due to cash deployed for capital return activities, principal payment on debt instruments, and capital expenditures, partially offset by cash generated from operating activities[8] Deferred Revenue Details Deferred revenue slightly decreased to $2,011 million, while estimated future revenue from shipments to customers in Japan, where control transfers upon acceptance, significantly increased to $587 million | Metric | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Deferred revenue | $2,011 million | $2,032 million | | Estimated future revenue from Japan shipments | $587 million | $453 million | - Deferred revenue balance does not include shipments to customers in Japan, which are classified as inventory until customer acceptance[9] Revenue Analysis Geographic Revenue Distribution China remained the largest revenue contributor at 31%, followed by Korea and Taiwan, both at 24%, indicating a strong presence in key Asian semiconductor markets | Region | Revenue Contribution | | :--- | :--- | | China | 31% | | Korea | 24% | | Taiwan | 24% | | Japan | 10% | | United States | 4% | | Southeast Asia | 4% | | Europe | 3% | Revenue Disaggregation by Type Systems revenue saw a significant increase quarter-over-quarter, reaching $3,035 million, while customer support-related revenue slightly decreased to $1,685 million | Revenue Type | March 30, 2025 | December 29, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Systems revenue | $3,035 million | $2,626 million | $2,396 million | | Customer support-related revenue and other | $1,685 million | $1,750 million | $1,398 million | | Total Revenue | $4,720 million | $4,376 million | $3,794 million | - Systems revenue includes sales of new leading-edge equipment in deposition, etch, clean, and other wafer fabrication markets[10] - Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Reliant® product line[11] Business Outlook Q2 2025 Financial Guidance Lam Research provided optimistic guidance for the quarter ending June 29, 2025, projecting revenue of $5.00 billion (±$300 million) and diluted EPS of $1.20 (±$0.10) for both U.S. GAAP and Non-GAAP | Metric | U.S. GAAP Guidance (June 29, 2025) | Non-GAAP Guidance (June 29, 2025) | | :--- | :--- | :--- | | Revenue | $5.00 Billion +/- $300 Million | $5.00 Billion +/- $300 Million | | Gross margin as a percentage of revenue | 49.4% +/- 1% | 49.5% +/- 1% | | Operating income as a percentage of revenue | 33.4% +/- 1% | 33.5% +/- 1% | | Net income per diluted share | $1.20 +/- $0.10 | $1.20 +/- $0.10 | | Diluted share count | 1.28 Billion | 1.28 Billion | Reconciling Items for Non-GAAP Guidance Known reconciling items for the June 2025 quarter guidance primarily include amortization related to intangible assets acquired through business combinations and amortization of debt discounts, impacting gross margin, operating income, and net income per diluted share - Gross margin as a percentage of revenue reconciling item: amortization related to intangible assets acquired through business combinations, $2.7 million[12] - Operating income as a percentage of revenue reconciling item: amortization related to intangible assets acquired through business combinations, $3.2 million[17] - Net income per diluted share reconciling items: amortization related to intangible assets acquired through business combinations ($3.2 million), amortization of debt discounts ($0.7 million), and associated tax benefit for non-GAAP items ($0.2 million), totaling $3.7 million[17] Non-GAAP Financial Information Purpose and Use of Non-GAAP Measures Lam Research uses non-GAAP financial results to evaluate operating and financial performance, believing they are useful for investors to analyze business trends, compare performance, and view results from management's perspective. Non-GAAP adjustments exclude items like amortization of acquired intangibles, deferred compensation effects, and note discounts - Non-GAAP results exclude amortization related to intangible assets acquired through business combinations, effects of elective deferred compensation-related assets and liabilities, amortization of note discounts, and the net income tax effect of non-GAAP items[13] - Management uses non-GAAP metrics to evaluate operating and financial results, believing they are useful for investors to analyze business trends, compare performance, and gain management's perspective[14] Non-GAAP Financial Summary The non-GAAP financial summary for the March 2025 quarter shows revenue of $4,720 million, gross margin of 49.0%, operating income of 32.8% of revenue, and diluted EPS of $1.04, reflecting consistent performance with the GAAP highlights | Metric | March 30, 2025 (Non-GAAP) | December 29, 2024 (Non-GAAP) | | :--- | :--- | :--- | | Revenue | $4,720 million | $4,376 million | | Gross margin | $2,312 million | $2,077 million | | Gross margin as percentage of revenue | 49.0% | 47.5% | | Operating expenses | $763 million | $735 million | | Operating income | $1,549 million | $1,343 million | | Operating income as a percentage of revenue | 32.8% | 30.7% | | Net income | $1,336 million | $1,175 million | | Net income per diluted share | $1.04 | $0.91 | | Shares used in per share calculation - diluted | 1,288,100 | 1,291,469 | Reconciliation of U.S. GAAP to Non-GAAP Net Income Reconciliation The reconciliation from U.S. GAAP net income to Non-GAAP net income primarily adjusts for amortization of acquired intangibles, elective deferred compensation valuation changes, amortization of note discounts, and related tax effects | Item | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | U.S. GAAP net income | $1,331 million | $1,191 million | | Amortization related to intangible assets (COGS) | $2,687 | $2,817 | | EDC related liability valuation (decrease) increase (COGS) | $(3,982) | $1,353 | | EDC related liability valuation (decrease) increase (R&D) | $(7,168) | $2,432 | | Amortization related to intangible assets (SG&A) | $538 | $538 | | EDC related liability valuation (decrease) increase (SG&A) | $(4,779) | $1,626 | | Amortization of note discounts | $759 | $772 | | Loss (gain) on EDC related asset | $16,903 | $(4,502) | | Net income tax expense (benefit) on non-GAAP items | $381 | $(276) | | Income tax benefit from a change in tax law | — | $(20,778) | | Non-GAAP net income | $1,336 million | $1,175 million | | Non-GAAP net income per diluted share | $1.04 | $0.91 | | U.S. GAAP net income per diluted share | $1.03 | $0.92 | Gross Margin, Operating Expenses, and Operating Income Reconciliation Reconciliations for gross margin, operating expenses, and operating income primarily adjust for amortization of acquired intangible assets and elective deferred compensation related liability valuation changes | Item | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | U.S. GAAP gross margin | $2,314 million | $2,073 million | | Amortization related to intangible assets | $2,687 | $2,817 | | EDC related liability valuation (decrease) increase | $(3,982) | $1,353 | | Non-GAAP gross margin | $2,312 million | $2,077 million | | U.S. GAAP gross margin as a percentage of revenue | 49.0% | 47.4% | | Non-GAAP gross margin as a percentage of revenue | 49.0% | 47.5% | | U.S. GAAP operating expenses | $752 million | $739 million | | Amortization related to intangible assets | $(538) | $(538) | | EDC related liability valuation decrease (increase) | $11,947 | $(4,058) | | Non-GAAP operating expenses | $763 million | $735 million | | U.S. GAAP operating income | $1,562 million | $1,334 million | | Non-GAAP operating income | $1,549 million | $1,343 million | | U.S. GAAP operating income as percent of revenue | 33.1% | 30.5% | | Non-GAAP operating income as a percent of revenue | 32.8% | 30.7% | Corporate Information and Disclosures Company Overview Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry, headquartered in Fremont, California, and recognized as a FORTUNE 500® company - Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry, enabling customers to build smaller and better performing devices[16] - The company combines superior systems engineering, technology leadership, and a strong values-based culture with a commitment to customers[16] Forward-Looking Statements Disclaimer The press release contains forward-looking statements subject to risks and uncertainties, including economic conditions, trade regulations, supply chain disruptions, and geopolitical tensions, which could cause actual results to differ materially from expectations - Forward-looking statements relate to future financial results, market opportunities, industry trends, and the company's ability to address tariff-related uncertainty[15] - Factors that may affect these statements include business, economic, political, and regulatory conditions, customer and competitor actions, trade regulations, supply chain issues, and natural disasters[15] - The company undertakes no obligation to update the information or statements made in the release[15] Investor Relations Contact Investor inquiries can be directed to Ram Ganesh, Investor Relations, via phone or email - Contact for Investor Relations: Ram Ganesh, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com[30] Condensed Consolidated Financial Statements Statements of Operations The condensed consolidated statements of operations show a significant increase in revenue and net income for both the three and nine months ended March 30, 2025, compared to prior periods, reflecting strong operational performance | Metric | Three Months Ended March 30, 2025 | Three Months Ended December 29, 2024 | Nine Months Ended March 30, 2025 | | :--- | :--- | :--- | :--- | | Revenue | $4,720 million | $4,376 million | $13,264 million | | Gross margin | $2,314 million | $2,073 million | $6,389 million | | Gross margin as a percent of revenue | 49.0% | 47.4% | 48.2% | | Operating income | $1,562 million | $1,334 million | $4,160 million | | Operating income as a percent of revenue | 33.1% | 30.5% | 31.4% | | Net income | $1,331 million | $1,191 million | $3,638 million | | Diluted EPS | $1.03 | $0.92 | $2.81 | | Cash dividend declared per common share | $0.23 | $0.23 | $0.69 | Balance Sheets The balance sheet indicates a slight decrease in cash and cash equivalents but an overall increase in total assets and stockholders' equity as of March 30, 2025, compared to the previous quarter and fiscal year-end | Asset/Liability | March 30, 2025 | December 29, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $5,451 million | $5,665 million | $5,848 million | | Total current assets | $13,460 million | $13,613 million | $12,883 million | | Total assets | $19,968 million | $19,840 million | $18,745 million | | Total current liabilities | $5,490 million | $5,350 million | $4,338 million | | Total liabilities | $10,457 million | $11,032 million | $10,205 million | | Stockholders' equity | $9,511 million | $8,808 million | $8,539 million | - Common shares issued and outstanding decreased from 1,284,956 as of December 29, 2024, to 1,282,957 as of March 30, 2025[22] Statements of Cash Flows Operating activities generated $1,309 million in cash for the March 2025 quarter, a substantial increase from the previous quarter, while significant cash was used for financing activities, primarily debt payments and treasury stock purchases | Cash Flow Activity | Three Months Ended March 30, 2025 | Three Months Ended December 29, 2024 | Nine Months Ended March 30, 2025 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $1,309 million | $742 million | $3,619 million | | Net cash used for investing activities | $(293 million) | $(175 million) | $(579 million) | | Net cash used for financing activities | $(1,233 million) | $(935 million) | $(3,427 million) | | Net change in cash, cash equivalents, and restricted cash | $(214 million) | $(395 million) | $(388 million) | | Cash, cash equivalents, and restricted cash at end of period | $5,463 million | $5,677 million | $5,463 million | - Principal payments on debt and finance lease obligations amounted to $504 million in the March 2025 quarter[24] - Treasury stock purchases, including excise tax payments, totaled $435 million for the quarter[24]