Financial Performance - Total net sales for Q1 2024 were €5.3 billion, at the midpoint of guidance, with net system sales of €4 billion driven primarily by Logic at 63% and Memory at 37% [7][8] - Gross margin for the quarter was 51%, exceeding guidance due to product mix and other factors [8] - Net income for Q1 was €1.2 billion, representing 23.1% of total net sales, resulting in an EPS of €3.11 [8] - Cash, cash equivalents, and short-term investments at the end of Q1 were €5.4 billion, lower than the previous quarter, with negative free cash flow attributed to lower down payments and higher inventory [9] Business Line Performance - Installed Base Management sales for Q1 were €1.3 billion, consistent with guidance [8] - Q1 net system bookings totaled €3.6 billion, with €656 million for EUV bookings and €2.9 billion for non-EUV bookings, driven by Memory at 59% and Logic at 41% [10][11] - The backlog at the end of Q1 was approximately €38 billion, indicating strong future demand [12] Market Trends - Semiconductor inventory levels are improving, with increased tool utilization among Logic and Memory customers, aligning with industry recovery [14] - Memory demand is driven by DRAM technology transitions supporting advanced memories like DDR5 and HBM, while Logic customers are digesting previous capacity additions [14][18] - The company expects a stronger second half of 2024, viewing it as a transition year with continued investments in capacity and technology [23] Strategic Direction - The company anticipates revenue growth in 2024, particularly from EUV systems, with plans to recognize revenue from 1 to 2 INA systems [18][19] - The focus remains on preparing for significant new fabs being built globally, supported by government incentives [25] - Long-term growth opportunities are expected despite near-term uncertainties, with a strong outlook for 2025 driven by secular growth in semiconductor end markets [24][26] Management Commentary - Management noted that the current environment is characterized by a recovery from the downturn, with expectations for a strong second half of 2024 [14][23] - The company remains confident in long-term growth opportunities, emphasizing the importance of both advanced and mainstream semiconductors [24][81] - Management highlighted the need for ongoing dialogue with customers to align on future demand and order placements [70] Q&A Session Summary Question: EUV orders and 2025 outlook - Management acknowledged that order intake can be lumpy and emphasized the need for significant orders from large customers to meet 2025 targets [30][34] Question: China sales impact - Management confirmed that while China sales were strong, they were lower in Q1 compared to Q4 of the previous year, but expected continued strength throughout 2024 [43][46] Question: Memory orders and technology transitions - The majority of recent memory orders were technology-related, particularly for DDR5 and HBM, indicating ongoing demand for advanced memory solutions [62] Question: Lead times and order placements - Management discussed the importance of ongoing customer dialogue to ensure timely order placements, despite bureaucratic processes that may delay formal orders [70][71] Question: Electrification and lithography demand - Management highlighted that electrification and investments in renewable energy are significant drivers for both mainstream and advanced semiconductor demand [95][96]