Yahoo Finance Lam Research Corp (LRCX) Q3 2024 Earnings Call Transcript Highlights: Key Financial Metrics and ...
Revenue: $3.79 billion for March 2024 quarter, roughly flat compared to the prior quarter.
Gross Margin: 48.7% for March 2024 quarter, an improvement from 47.6% in December quarter.
Net Income: Not explicitly mentioned, but earnings per share and other profitability metrics provided.
Earnings Per Share (EPS): $7.79 for March 2024 quarter, towards the higher end of the guided range.
Free Cash Flow: $1.3 billion, representing 34% of revenue for March 2024 quarter.
Deferred Revenue: $1.75 billion at the end of March 2024 quarter, a decrease of $182 million from December quarter.
Systems Revenue in Memory: 44% for March 2024 quarter, down from 48% in the prior quarter.
Foundry Segment Revenue: 44% of systems revenue for March 2024 quarter, up from 38% in December quarter.
Logic and Other Segment Revenue: 12% of systems revenue for March 2024 quarter, down from 14% in prior quarter.
Geographic Revenue - China: 42% of total revenue for March 2024 quarter, up from 40% in prior quarter.
Customer Support Business Group Revenue: Approximately $1.4 billion for March 2024 quarter, down 4% from December quarter.
Operating Margin: 30.3% for March 2024 quarter, consistent with 30% in December quarter.
Capital Expenditures: $104 million for March 2024 quarter, focused on lab expansions in the U.S. and Asia.
Employee Count: Approximately 17,200 regular full-time employees, flat with the prior quarter.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: First one for Tim. Tim, a question on high aspect ratio for NAND, where you have a very high market share. And you said in your prepared comments, you defended market share there. Your company that took you to try -- introduced to visit Cryo-X product a year ago, but you also have 1 from 3 years ago. So I'm kind of curious, can you talk a little bit about the market share dynamics and high aspect ratio issue were? And the fact that some of your customers are talking about using Cryo-X for like 430 layer NAND. So can you give us some color there on high-aspect-ratio etch? And then I have a follow-up for Doug. A: Timothy M. Archer - Lam Research Corporation - President, CEO & Director: Sure. Krish, on cryo etch, had a couple of data points in my prepared remarks. But one is we have an installed base of cryo etch tools used for NAND that's now approaching 1,000 chambers. So obviously, we've been in high-volume production with this application for quite some time. And my comment was that there always are customers exploring different options during the development phase. But as my comment is, these are very complex processes to put into high-volume production. And so we continue to leverage the learning that we get working with our customers, the focus on technology extension and manufacturing readiness. And by that focus, we've been able to defend the decisions once they come to that point of the customer really having to decide which tool to commit their next fabrication line, too. And so that's all we can say is we're working hard to make sure we have the best tool for the application. And so far, it's winning the day.
Q: Got it. Got it. So good to hear that the share is still solid. And then a follow-up for Doug on margins. Doug, you kind of mentioned about the gross margin, maybe moderation in the June quarter due to the customer mix. Is that mainly a function of China? And how to think about gross margins in the second half? And maybe if I can extend that question how to think about OpEx into the back half of the year, too? A: Douglas R. Bettinger - Lam Research Corporation - Executive VP & CFO: Yes. Krish, I guess I'd say a couple of things. First, gross margin, sometimes it's a little bit better when we're selling to smaller customers, and I'm not going to pin it to any one geographic region necessarily. But in China, there are some smaller customers, and they tend to -- because we have volume purchase pricing sometimes, they pay a little bit more. And -- but it's not because of a geographic regions, it's because of the size of the customer. So that's one thing to think about. And in my scripted remarks as well as what Tim said is we think that the China region will modulate a little bit as we go through the year. So that's part of what we need to think about. And I've been talking about this for a couple of quarters. So anyway, I have that in mind when you're updating your models. Second, we've been talking, I think, for a couple of quarters now, maybe actually 3 quarters about the need to grow R&D investment this year because of these technology changes that we see, like gate-all-around, backside power, advanced packaging and so forth, dry photoresist. And we're absolutely planning on doing that. You saw that in the March quarter, R&D as a percent of total spending was the highest that I have seen here at 71%, and we intend to keep investing in R&D. So independent of whatever the top line is, we're going to grow R&D investment this year.
Q: So I wanted to ask about China. So it's going to modulate through the year, the mix, but it sounds like it's still going to be up year-over-year for domestic China this year. So I guess my question is, we've seen some headlines on a few entities being potentially added to the entity list. And I'm wondering if these comments reflect the potential addition of these entities? Or does it basically say, hey, if the status quo remains, this is what your assumption is, meaning that if there were entities added that, that would be downside to these comments? A: Timothy M. Archer - Lam Research Corporation - President, CEO & Director: Yes. Tim, I mean, obviously, we can't forecast changes in U.S. trade policy with respect to China that we don't know about. And so we're basically giving you our best view of what we think our China business will be through the rest of the year and recognizing that there could be changes that we don't foresee. Well, what I will say is we -- obviously, we've built up what we believe is a strong government affairs team were plugged into all the relevant discussions. And I think over the last couple of years, you've seen we have a pretty strong track record of working with the U.S. government responding to export control policy and that's just what we plan to do going on into the future.
Q: Sure. And Doug, I just wanted to ask about service a bit. So there's much different dynamics happening in the spares and in the Reliant business. Can you talk about that because it certainly sounds -- I mean, this is kind of an odd situation that we'd have spares piece so strong and Reliant piece so weak. So can you sort of give us any read-throughs there? Like what does that mean for the future of that business? A: Douglas R. Bettinger - Lam Research Corporation - Executive VP & CFO: Yes. Listen, I think it's well understood right now that you've got 2 dynamics going on relative to thinking about the different components of CSBG. First, industry utilization is starting to get somewhat better. I would definitely say it's early days for that. But the reason I specifically talked about the spares level versus where it's been over the last couple of years is because of that. That clearly is beginning to show up in our spares business. However, when we rate CSBG in total, we were down now because of the softness in Reliant. I also think that's pretty well understood in the industry, right? Mature node investment outside of the China region certainly is pretty soft right now. And so you have those 2 competing dynamics going on that's shown up in the CSBG line. If I was guessing, Tim, right now, CSBG is probably flattish this year from last year because of those 2 offsetting dynamics, if that helps you think about it.
Q: Within accelerated compute and AI semiconductor segment of the market, there still seems to be a lot of constraints centered around high-bandwidth memory and tightness in colos packaging. Obviously, you guys have a very strong position here
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
