ASML Holding(ASML)2020-10-14 19:34Financial Data and Key Metrics Changes - Net sales for Q3 2020 were €4 billion, exceeding guidance primarily due to additional EUV system revenue [8] - Net system sales amounted to €3.1 billion, with 79% from Logic and 21% from Memory [9] - Gross margin for the quarter was 47.5%, aligning with guidance [9] - Net income reached €1.061 billion, representing 26.8% of net sales, resulting in an NPS of €2.54 [9] - Cash, cash equivalents, and short-term investments remained at €4.4 billion [10] Business Line Data and Key Metrics Changes - EUV system revenue constituted 66% of total system revenue, marking the first time EUV surpassed DPV system revenue [8] - Installed base management sales were €862 million, indicating strong service and field option business [9] - Q3 system bookings totaled €2.9 billion, with €595 million for EUV systems, primarily driven by Logic [10] Market Data and Key Metrics Changes - Sales to China accounted for 21% of system revenue, with expectations to exceed €1 billion for the year [15] - Logic customers are experiencing strong demand for advanced nodes, driven by 5G, AI, and high-performance computing [14] - Memory customers are seeing healthy demand in data centers and consumer electronics, with a recovery in lithography demand for DRAM expected [15] Company Strategy and Development Direction - The company aims to continue driving profitability in EUV systems and service business, targeting at least 40% system gross margin [19] - Plans to manufacture 35 EUV systems in 2020, with a revenue target of approximately €4.5 billion for EUV systems [18] - The company is focused on capital allocation and improving free cash flow generation through new customer contracts [11] Management's Comments on Operating Environment and Future Outlook - Despite macro uncertainties from COVID-19, the growth outlook remains largely unchanged, reflecting customer investment in future technology nodes [14] - The company expects low double-digit growth in 2021, driven by anticipated EUV system revenue growth of around 20% [21] - Management acknowledges uncertainties due to the macro environment and geopolitical factors, particularly U.S.-China dynamics [22] Other Important Information - The company plans to resume share buybacks, targeting €6 billion over three years [13] - Interim dividends for 2020 will be €1.20 per ordinary share, with specific dates for ex-dividend and payment [11] Q&A Session Summary Question: EUV growth for next year - Management indicated that the 20% EUV revenue growth for next year is based on current demand and configurations, not specific unit numbers [27][29] Question: DRAM makers' CapEx concerns - Management believes that any potential drop in Huawei's sales will not significantly impact DRAM demand, as other customers will fill the gap [30][32] Question: EUV growth assumptions - The 20% growth includes shipments that may slip from 2020 to 2021, with potential upside drivers not included in the current forecast [35][36] Question: OpEx growth expectations - SG&A is expected to remain stable, while R&D expenses are anticipated to increase due to ongoing projects [40][41] Question: EUV layer count and technological readiness - Management confirmed that customers are increasingly confident in EUV technology, with layer counts expected to rise in both Logic and DRAM [54][56] Question: Shipping to Chinese customers amid sanctions - The company can still ship to certain Chinese customers under current regulations, emphasizing the critical need for lithography tools [64][65]