Lam Research (LRCX) Q1 2025 earnings summary

Executive summary

• Achieved fifth consecutive quarter of revenue growth, with Q1/Q3 FY2024 revenue and EPS above guidance midpoints and profitability above the high end of guidance.

• Strong execution and investments in technology inflections position the company to outperform wafer fab equipment (WFE) growth in 2025.

• AI-driven demand and technology upgrades in NAND, Foundry/Logic, and DRAM are key growth drivers.

• Demand is driven by cloud, AI, 5G, and IoT, with industry trends toward 3D architectures and advanced packaging.

• Ten-for-one stock split effective October 2, 2024; all per-share data adjusted accordingly.

Financial highlights

• Quarterly revenue was $4.17 billion, up 8% sequentially and 20% year-over-year; deferred revenue rose to $2.05 billion, mainly from customer prepayments.

• Gross margin was 48.2% (non-GAAP) and 48.0% (GAAP), exceeding guidance; operating margin reached 30.9% (non-GAAP) and 30.3% (GAAP).

• Net income was $1.12 billion (GAAP), with diluted EPS at $0.86 (post-split), both up from the prior year.

• Free cash flow was $1.46 billion; cash and equivalents ended at $6.1 billion.

• Deferred revenue increased by $495 million sequentially; inventory at $4.2 billion with improved turns (2.1x vs. 1.9x prior quarter).

Outlook and guidance

• December 2024 quarter revenue guidance: $4.3 billion ± $300 million; gross margin 47% ± 1pp; operating margin 30% ± 1pp; EPS $0.87 ± $0.10.

• Management expects to outperform WFE market growth in 2025 and beyond due to investments in etch and deposition technologies.

• Anticipated cash flows and current liquidity are expected to support operations, investments, and capital returns for at least the next twelve months.

• Expecting modest operating leverage improvement for full year 2024; investments in technology differentiation prioritized.

• 2025 WFE expected to grow from 2024’s mid-$90 billion range, with company revenue growth outpacing WFE.