ASML Holding(US:ASML)2024-10-16 14:00Financial Data and Key Metrics Changes - Total net sales for Q3 2024 reached EUR 7.5 billion, exceeding guidance due to increased DEEP UV system sales and higher installed base management sales [9] - Gross margin for the quarter was 50.8%, within guidance, with operating expenses for R&D at EUR 1.06 billion and SG&A at EUR 297 million [10] - Free cash flow improved to EUR 534 million, although pressure remains due to lower order intake and higher inventory levels [10] - Q3 net system bookings totaled EUR 2.6 billion, with a backlog exceeding EUR 36 billion at the end of Q3 2024 [11] Business Line Data and Key Metrics Changes - Net sales comprised EUR 2.1 billion from EUV sales and EUR 3.8 billion from non-EUV sales, with logic accounting for 64% of net system sales and memory for 36% [9] - Installed Base Management sales were EUR 1.54 billion, driven by higher service and upgrade revenue [9] Market Data and Key Metrics Changes - The order intake reflects a slow recovery in traditional end markets, with customers remaining cautious [11] - The company expects Q4 total net sales between EUR 8.8 billion and EUR 9.2 billion, with installed base management sales around EUR 1.9 billion [12] Company Strategy and Development Direction - The company continues to focus on advancing EUV technology, with significant improvements in throughput and performance expected from the new NXE:3800E system [14] - The strategy includes preparing for new fabs globally to meet future demand, with a focus on building capacity to respond to anticipated increases in demand throughout the decade [21] Management's Comments on Operating Environment and Future Outlook - Management noted that while AI is a key driver for industry recovery, other segments are recovering more slowly than anticipated, leading to cautious customer behavior [16] - The outlook for 2025 revenue has been adjusted to EUR 30 billion to EUR 35 billion, reflecting a slower recovery and reduced growth expectations [19] Other Important Information - The company declared a quarterly interim dividend of EUR 1.52 per ordinary share for Q3 2024, with the next payment scheduled for November 7, 2024 [13] - Management emphasized the importance of maintaining operational flexibility in response to market dynamics and customer demand [47] Q&A Session Summary Question: Changes in China Demand - Management indicated that the normalization of China sales is due to a combination of backlog adjustments and cautiousness regarding export controls, projecting China to represent 20% of total sales in 2025 [26][70] Question: 2025 Gross Margin Guidance - The reduction in expected EUV shipments and changes in product mix are key factors influencing the 2025 gross margin guidance, which is now expected to be between 51% and 53% [20][29] Question: Impact of Customer Push Outs - Management acknowledged that customer push outs are a mix of slower end demand and competitive dynamics, affecting the timing of fab constructions [35][36] Question: Installed Base Management Growth - Management expects healthy double-digit growth in installed base management for 2025, driven by service and upgrade revenues [39] Question: High NA Technology Adoption - Interest in High NA technology is increasing, with positive performance data being generated, although discussions about future improvements are long-term [42][61] Question: Order Levels Needed for Guidance - To reach the midpoint of the new guidance, the company needs approximately EUR 2 billion in orders by the end of the year, with some flexibility for orders coming in Q1 [66] Question: DUV Growth Outside China - Management expressed confidence in significant growth for DUV outside China, correlating with EUV demand, particularly in leading nodes [84]