Applied Materials (AMAT) Q3 Earnings & Revenues Top Estimates

Core Insights - Applied Materials Inc. (AMAT) reported third-quarter fiscal 2024 non-GAAP earnings of $2.12 per share, exceeding the Zacks Consensus Estimate by 5.5% and improving 12% year-over-year [1] - Net revenues reached $6.78 billion, a 5% increase from the previous year, surpassing the consensus estimate by 1.6% [1] - The company experienced strong momentum in the Display and Adjacent Markets and Applied Global Services (AGS) segments, with notable performance in the Semiconductor Systems segment [1] - AMAT's shares have increased by 31.2% over the past year, outperforming the industry's growth of 17.4% [1] - Weak momentum in Taiwan and Europe was identified as a significant negative factor [1] Segment Performance - Semiconductor Systems generated revenues of $4.92 billion, accounting for 72.7% of net revenues, reflecting a growth of 5.3% year-over-year and surpassing the Zacks Consensus Estimate by 2.3% [2] - AGS reported revenues of $1.58 billion, representing 23.3% of net revenues, up 7.9% from the prior year and exceeding the consensus estimate by 0.5% [2] - Revenues from Display and Adjacent Markets were $251 million, up 6.8% year-over-year, beating the consensus estimate by 2.4% [2] - Corporate and Other revenues were $23 million, down 54% year-over-year [2] Geographic Revenue Breakdown - Revenues by geography included: - United States: $1.05 billion (16%) - Europe: $339 million (5%) - Japan: $555 million (8%) - Korea: $1.1 billion (16%) - Taiwan: $1.15 billion (17%) - Southeast Asia: $428 million (6%) - China: $2.15 billion (32%) [3] - Year-over-year revenue changes showed increases in the U.S. (1.3%), Japan (16.1%), Korea (11.5%), Southeast Asia (137.8%), and China (24.2%), while Europe and Taiwan saw declines of 48.7% and 14.6%, respectively [3] Operating Results - The non-GAAP gross margin was 47.4%, expanding by 100 basis points from the previous year [4] - Operating expenses were $1.26 billion, an 8% increase year-over-year, with expenses as a percentage of sales rising to 18.7% [4] - The non-GAAP operating margin improved to 28.8%, up 50 basis points year-over-year [4] Balance Sheet & Cash Flow - As of July 28, 2024, cash and short-term investments totaled $9.1 billion, up from $7.6 billion as of April 28, 2024 [5] - Inventories were $5.6 billion, slightly down from $5.7 billion in the previous quarter [5] - Accounts receivables increased to $4.97 billion from $4.8 billion in the prior quarter [5] - Long-term debt rose to $6.16 billion from $5.463 billion at the end of the previous quarter [5] - Free cash flow generated was $2.09 billion, up from $1.14 billion in the prior quarter [6] - AMAT returned $1.19 billion to shareholders, including $861 million in share repurchases and $331 million in dividends [6] Guidance - For the fiscal fourth quarter, AMAT expects net sales of $6.93 billion (+/- $400 million), with the Zacks Consensus Estimate at $6.89 billion [7] - Projected sales for Semiconductor Systems, AGS, and Display are $5.1 billion, $1.61 billion, and $200 million, respectively [7] - The company anticipates a non-GAAP gross margin of 47.4% and operating expenses of $1.275 billion, with a non-GAAP tax rate of 12.5% [7] - Expected non-GAAP earnings per share are $2.18 (+/- $0.18), with the Zacks Consensus Estimate at $2.11 [7]