ASML Holding(ASML) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net sales for Q1 2025 were EUR7.7 billion, in line with guidance [8] - Net system sales were EUR5.7 billion, comprising EUR3.2 billion from EUV sales and EUR2.5 billion from non-EUV sales [8] - Gross margin for the quarter was above guidance at 54%, driven by customer productivity milestones on installed EUV systems [9] - Net income in Q1 was EUR2.4 billion, representing 30.4% of total net sales, resulting in earnings per share of EUR6 [10] - Free cash flow for Q1 was negative EUR475 million due to customer payment dynamics and investments in fixed assets [10] Business Line Data and Key Metrics Changes - Net system bookings in Q1 were EUR3.9 billion, with EUV bookings at EUR1.2 billion and non-EUV at EUR2.8 billion [11] - Installed Base Management sales for the quarter were EUR2.0 billion [8] - Logic accounted for 58% of net system sales, while Memory accounted for 42% [8] Market Data and Key Metrics Changes - Revenue from Logic is expected to increase compared to 2024, with strong Memory revenue anticipated to remain similar to 2024 [15] - Installed Base Management revenue is expected to grow compared to 2024, driven by increasing service levels and contributions from EUV [15] Company Strategy and Development Direction - The growth in Artificial Intelligence is identified as a key driver for growth in the industry [14] - The company expects revenue for 2025 to be between EUR30 billion and EUR35 billion, with 2026 also anticipated to be a growth year [17] - The company is focusing on achieving milestones in both Low NA and High NA EUV platforms to support customer roadmaps [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges increased uncertainty in the macro environment due to tariff discussions, which may impact customers and suppliers [16] - The company is working with customers and suppliers to limit the direct impact of tariffs on results [19] - Conversations with customers indicate strong demand for AI, which is expected to solidify future demand [31] Other Important Information - The company paid a third quarterly interim dividend of EUR1.52 per ordinary share in Q1 2025 [12] - The company purchased shares for a total amount of around EUR2.7 billion in Q1 2025 [12] Q&A Session Summary Question: On High NA pricing flexibility for adoption - Management indicated that the main barrier to adoption is tool maturity rather than pricing, emphasizing the importance of achieving the right level of maturity before considering price adjustments [38][40] Question: Timing for single expose EUV adoption in DRAM - Management stated that the adoption of single expose EUV is happening continuously, with optimism for increased adoption in the coming years as productivity improves [44] Question: Bookings run rate for growth expectations - Management refrained from commenting on specific booking levels but indicated that there is a significant backlog that pertains to periods beyond 2025 [52] Question: China sales percentage and backlog composition - Management confirmed that China is expected to be a little over 25% of sales this year, with the backlog composition remaining stable in the 20% to 25% range [56][57] Question: Customer conversations regarding tariffs - Management noted that tariff announcements have not fundamentally changed business discussions, but there is uncertainty among customers regarding the implications [63][65] Question: EUV technology development in China - Management expressed skepticism about China's ability to develop EUV technology, indicating that significant progress is still years away [86] Question: AI demand and long-term TAM expectations - Management confirmed strong demand for AI, with expectations that inferencing will become a larger component of AI demand moving forward [88] Question: Gross margin expectations and tariff impacts - Management stated that it is difficult to quantify the impact of tariffs on gross margins for the full year due to ongoing uncertainties [96] Question: Geographic diversity and its effect on business - Management acknowledged that geographic diversity in semiconductor manufacturing could lead to increased demand for wafers, but tariff uncertainties remain a concern [102]