Applied Materials(US:AMAT)2025-12-12 21:01Backlog and Revenue - Semiconductor Systems segment backlog as of October 26, 2025, was $7,105 million, representing 47% of total backlog[29] - Applied Global Services segment backlog was $7,141 million, accounting for 48% of total backlog[29] - Total backlog as of October 26, 2025, was $15,002 million, with approximately 31% not expected to be filled within the next 12 months[29] - Net revenue for fiscal 2025 was $28,368 million, an increase of $1,192 million (4%) compared to $27,176 million in fiscal 2024[149] - AGS net revenue for fiscal 2025 increased to $28.368 billion, a 4% increase from $27.176 billion in fiscal 2024[153] - Semiconductor Systems segment generated $20,798 million in revenue, representing a 4% increase from $19,911 million in fiscal 2024[149] - Applied Global Services segment revenue was $6,385 million, a 3% increase from $6,225 million in fiscal 2024[149] - Corporate and Other segment revenue increased by 14% to $1,185 million from $1,040 million in fiscal 2024[149] Financial Performance - Gross margin improved to 48.7% in fiscal 2025, up from 47.5% in fiscal 2024, reflecting favorable changes in customer and product mix[149] - Operating income for fiscal 2025 was $8,289 million, an increase of $422 million (5.4%) from $7,867 million in fiscal 2024[149] - Net income for fiscal 2025 was $6,998 million, a decrease of $179 million (2.5%) compared to $7,177 million in fiscal 2024[149] - Earnings per diluted share increased to $8.66 in fiscal 2025, up by $0.05 from $8.61 in fiscal 2024[149] Employee and Talent Management - The company employs approximately 36,500 full-time employees across 25 countries, with 46% in the Asia-Pacific region[50] - The company emphasizes the importance of attracting, developing, and retaining employees through competitive rewards and benefits, including an Employee Stock Incentive Plan and healthcare benefits[52] - Employee learning and development is structured around the 70/20/10 model, focusing on 70% on-the-job learning, 20% social/collaborative, and 10% formal training, with advanced training modalities like AI-based simulations[53] - In fiscal 2025, the company conducted an all-employee survey to measure engagement, benchmarking results against large technology companies globally to enhance employee satisfaction and collaboration[54] - The ability to attract, retain, and motivate key employees is vital for the company's success, with challenges arising from global competition for talent[99] Research and Development - Significant investments in research, development, and engineering are aimed at delivering new products and technologies ahead of demand[33] - The company is committed to ongoing investment in research and development to remain competitive, even during periods of economic uncertainty[63] - Research, development and engineering (RD&E) expenses increased to $3.570 billion, up from $3.233 billion in fiscal 2024, reflecting higher headcount and depreciation[154] - The company is committed to improving productivity in research and development activities to enhance capital efficiency[87] Market and Industry Risks - The company anticipates increased competition from domestic equipment manufacturers in China due to local government incentives[37] - The company faces risks from the cyclical nature of the semiconductor industry, which is influenced by customer demand, technology advancements, and economic conditions[60] - Global trade issues and changes in trade policies, including tariffs and export regulations, have adversely impacted the company's operations and competitiveness[67] - The U.S. government has imposed additional export regulations affecting semiconductor technology sales to China, which could limit market access and impact revenues[68] - Economic uncertainties, including inflation and interest rate changes, could lead to customer delays in purchasing equipment, negatively impacting demand and revenue[62] - Supply chain disruptions and manufacturing interruptions could lead to higher costs and excess or obsolete inventory, adversely affecting the company's ability to meet customer demand[74] - The company faces risks from geopolitical factors, including trade regulations and export controls, particularly concerning semiconductor components and rare earth minerals[79] - The semiconductor industry is characterized by rapid technological changes, requiring the company to effectively anticipate and adapt to these changes to maintain competitiveness[82] Legal and Compliance Risks - The company has received multiple subpoenas from U.S. government authorities regarding transactions with certain foreign entities, particularly related to China shipments and export controls compliance[69] - The company may incur significant legal costs and penalties due to potential violations of laws or regulations, which could adversely affect its financial condition[70] - The company is exposed to risks related to legal proceedings and investigations, which may be time-consuming and expensive[111] - The company is subject to examination by the U.S. Internal Revenue Service and other tax authorities, which may lead to litigation and affect its tax provisions[104] Financial Position and Capital Management - The company has $6.5 billion in aggregate principal amount of senior unsecured notes outstanding as of October 26, 2025[105] - The company has revolving credit facilities allowing borrowing up to approximately $4.1 billion, with no amounts outstanding as of October 26, 2025[106] - The company has credit facilities for unsecured borrowings totaling $4.1 billion, with no amounts outstanding as of October 26, 2025[179] - A short-term commercial paper program allows the issuance of up to $4.0 billion, with $100 million of commercial paper notes outstanding as of October 26, 2025[180] - The company recognized a reduction in current income taxes payable by $233 million and future income taxes payable by $548 million due to the investment tax credit from the CHIPS Act[185] - The gross liability for unrecognized tax benefits was $452 million as of October 26, 2025, with interest and penalties related to uncertain tax positions totaling $118 million[197] Corporate Governance and Internal Controls - Management concluded that internal control over financial reporting was effective as of October 26, 2025[214] - KPMG LLP audited the consolidated financial statements and reported on the effectiveness of internal control over financial reporting as of October 26, 2025[215] - No changes in internal control over financial reporting during Q4 of fiscal 2025 that materially affected its effectiveness[216] - The design of any control system is based on certain assumptions about the likelihood of future events, providing only reasonable assurance[217]