10-QPeriod: Q1 FY2024

APPLIED MATERIALS INC /DE Quarterly Report for Q1 Ended Jan 28, 2024

Filed February 27, 2024For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) reported its second-quarter fiscal 2024 results, showing resilient revenue and a notable increase in net income compared to the prior year. While net revenue saw a slight decrease year-over-year, primarily driven by a pullback in Semiconductor Systems, the company demonstrated strong operational execution, leading to a significant improvement in profitability. The company's financial performance was bolstered by a substantial rise in interest and other income, alongside a gross margin improvement, indicating effective cost management and favorable pricing. Applied Materials also continued its commitment to returning capital to shareholders through dividends and substantial share repurchases, underscoring its financial strength and confidence in future prospects. The outlook suggests continued strategic investment in key technology transitions within the semiconductor and display industries, positioning AMAT to capitalize on future growth opportunities.

Financial Highlights

57 data points
Beta

Revenue

$6.71B

47.8% Gross Margin

Net Income

$2.02B

30.1% Net Margin

EPS (Diluted)

$2.41

Total Assets

$31.54B

Cash & Equivalents

$6.85B

Free Cash Flow

$2.10B

Financial Statements
Beta
Revenue$6.71B
Cost of Revenue$3.50B
Gross Profit$3.20B
R&D Expenses$754.00M
Operating Expenses$1.24B
Operating Income$1.97B
Interest Expense$59.00M
Net Income$2.02B
EPS (Basic)$2.43
EPS (Diluted)$2.41
Shares Outstanding (Basic)831.00M
Shares Outstanding (Diluted)837.00M

Key Highlights

  • 1Net income increased by approximately 17.2% to $2.019 billion, or $2.41 per diluted share, compared to $1.717 billion, or $2.02 per diluted share, in the prior year's quarter.
  • 2Total net revenue was $6.707 billion, a slight decrease of 0.5% from $6.739 billion in the same period last year, reflecting mixed performance across segments.
  • 3Gross margin improved to 47.8% from 46.7% in the prior year's quarter, driven by lower costs and a decrease in inventory reserves.
  • 4Interest and other income (expense), net, saw a significant increase, rising to $395 million from $50 million in the prior year, primarily due to higher net gains on equity investments and increased interest income.
  • 5The company returned $1.2 billion to shareholders through share repurchases ($700 million) and dividends ($266 million) during the quarter.
  • 6Semiconductor Systems, the largest segment, saw revenue decline by 5% to $4.909 billion, while Applied Global Services revenue grew by 8% to $1.476 billion, and Display and Adjacent Markets revenue surged by 46% to $244 million.
  • 7Cash provided by operating activities remained strong at $2.325 billion, reflecting solid cash generation capabilities.

Frequently Asked Questions

Applied Materials reported resilient financial performance with a slight year-over-year decrease in net revenue to $6.707 billion. However, net income saw a significant increase of 17.2% to $2.019 billion, or $2.41 per diluted share, driven by improved gross margins and a substantial increase in other income.

The Semiconductor Systems segment, which is the largest, experienced a 5% revenue decline. In contrast, the Applied Global Services segment showed robust growth with an 8% revenue increase, and the Display and Adjacent Markets segment saw a significant surge of 46% in revenue. This indicates a mixed performance across the company's core businesses.

Applied Materials demonstrated a strong commitment to shareholder returns by repurchasing $700 million worth of its common stock and paying $266 million in dividends during the quarter, totaling $1.2 billion in capital returned to shareholders. The company also has approximately $12.0 billion remaining available under its stock repurchase program.

The significant increase in net income was primarily driven by an improved gross margin of 47.8% (up from 46.7% year-over-year) due to lower costs and reduced inventory reserves. Additionally, a substantial increase in interest and other income, largely from gains on equity investments and higher interest income, significantly boosted the bottom line.