Revenue $6.71 billion, flat year over year
GAAP operating margin 29.3 percent and non-GAAP operating margin 29.5 percent, up 0.1 points and flat year over year, respectively
GAAP EPS $2.41 and non-GAAP EPS $2.13, up 19 percent and 5 percent year over year, respectively
Generated $2.33 billion in cash from operations
SANTA CLARA, Calif., Feb. 15, 2024 (GLOBE NEWSWIRE) — Applied Materials, Inc. (NASDAQ:AMAT) today reported results for its first quarter ended Jan. 28, 2024.
First Quarter Results
Applied generated revenue of $6.71 billion. On a GAAP basis, the company reported gross margin of 47.8 percent, operating income of $1.97 billion or 29.3 percent of net revenue, and earnings per share (EPS) of $2.41.
On a non-GAAP basis, the company reported gross margin of 47.9 percent, operating income of $1.98 billion or 29.5 percent of net revenue, and EPS of $2.13.
The recently disclosed change in useful lives of certain property, plant and equipment increased GAAP and non-GAAP EPS by $0.03.
The company generated $2.33 billion in cash from operations and distributed $966 million to shareholders including $700 million in share repurchases and $266 million in dividends.
“Applied Materials delivered strong results in the first quarter of fiscal 2024 and has outperformed our markets for the fifth consecutive year,” said Gary Dickerson, President and CEO. “Our leadership positions at key semiconductor inflections support continued outperformance as customers ramp next-generation chip technologies critical to AI and IoT over the next several years.”
Results Summary
Q1 FY2024
Q1 FY2023
Change
(In millions, except per share amounts and percentages)
Net revenue
$
6,707
$
6,739
—
Gross margin
47.8
%
46.7
%
1.1 points
Operating margin
29.3
%
29.2
%
0.1 points
Net income
$
2,019
$
1,717
18%
Diluted earnings per share
$
2.41
$
2.02
19%
Non-GAAP Results
Non-GAAP gross margin
47.9
%
46.8
%
1.1 points
Non-GAAP operating margin
29.5
%
29.5
%
—
Non-GAAP net income
$
1,782
$
1,724
3%
Non-GAAP diluted EPS
$
2.13
$
2.03
5%
Non-GAAP free cash flow
$
2,096
$
1,983
6%
A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release. See also “Use of Non-GAAP Financial Measures” section.
Business Outlook
In the second quarter of fiscal 2024, Applied expects net revenue to be approximately $6.50 billion, plus or minus $400 million. Non-GAAP diluted EPS is expected to be in the range of $1.79 to $2.15.
This outlook for non-GAAP diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes the normalized tax benefit of share-based compensation of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.02 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax-related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.
First Quarter Reportable Segment Information
Effective in the first quarter of fiscal 2024, management began including share-based compensation expense in the evaluation of reportable segments’ performance. Prior-year numbers have been recast to conform to the current-year presentation.
Semiconductor Systems
Q1 FY2024
Q1 FY2023
(In millions, except percentages)
Net revenue
$
4,909
$
5,162
Foundry, logic and other
62
%
77
%
DRAM
34
%
13
%
Flash memory
4
%
10
%
Operating income
$
1,744
$
1,855
Operating margin
35.5
%
35.9
%
Non-GAAP Results
Non-GAAP operating income
$
1,754
$
1,864
Non-GAAP operating margin
35.7
%
36.1
%
Applied Global Services
Q1 FY2024
Q1 FY2023
(In millions, except percentages)
Net revenue
$
1,476
$
1,369
Operating income
$
417
$
345
Operating margin
28.3
%
25.2
%
Non-GAAP Results
Non-GAAP operating income
$
417
$
345
Non-GAAP operating margin
28.3
%
25.2
%
Display and Adjacent Markets
Q1 FY2024
Q1 FY2023
(In millions, except percentages)
Net revenue
$
244
$
167
Operating income
$
25
$
3
Operating margin
10.2
%
1.8
%
Non-GAAP Results
Non-GAAP operating income
$
25
$
3
Non-GAAP operating margin
10.2
%
1.8
%
Use of Non-GAAP Financial Measures
Applied provides investors with certain non-GAAP financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; impairments of assets; gain or loss, dividends and impairments on strategic investments; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.
Management uses these non-GAAP financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied’s ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.
Forward-Looking Statement
This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the second quarter of fiscal 2024 and beyond, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products, our ability to meet customer demand, and our suppliers’ ability to meet our demand requirements; global economic, political and industry conditions, including rising inflation and interest rates; the implementation and interpretation of new export regulations and license requirements, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies; our ability to obtain licenses or authorizations on a timely basis, if at all; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the effects of geopolitical turmoil or conflicts, and of regional or global health epidemics; acquisitions, investments and divestitures; changes in income tax laws; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; our ability to ensure compliance with applicable law, rules and regulations and other risks and uncertainties described in our SEC filings, including our recent Forms 10-K and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.
About Applied Materials
Applied Materials, Inc. (NASDAQ:AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible a better future. Learn more at www.appliedmaterials.com.
Contact:
Ricky Gradwohl (editorial/media) 408.235.4676
Michael Sullivan (financial community) 408.986.7977
APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
(In millions, except per share amounts)
January 28,
2024
January 29,
2023
Net revenue
$
6,707
$
6,739
Cost of products sold
3,503
3,594
Gross profit
3,204
3,145
Operating expenses:
Research, development and engineering
754
771
Marketing and selling
207
197
General and administrative
276
207
Total operating expenses
1,237
1,175
Income from operations
1,967
1,970
Interest expense
59
59
Interest and other income (expense), net
395
50
Income before income taxes
2,303
1,961
Provision for income taxes
284
244
Net income
$
2,019
$
1,717
Earnings per share:
Basic
$
2.43
$
2.03
Diluted
$