01—Abstract
Summary
Summary of the 10-Q filed May 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Applied Materials, Inc. (AMAT) reported financial results for the second quarter and first half of fiscal year 2024, demonstrating resilience and strategic execution in a dynamic market.
For the quarter ended April 28, 2024, net revenue was largely flat year-over-year at $6.646 billiona, with diluted earnings per share (EPS) increasing to $2.06, up from $1.86 in the prior year's comparable quarter. This performance was driven by a stable Semiconductor Systems segment, growth in Applied Global Services, and increased revenue in Display and Adjacent Markets, despite a complex global economic and geopolitical landscape. The company continues to focus on innovation and customer support, underpinning its market leadership.
The first half of fiscal 2024 also showed a slight revenue decline to $13.353 billion, but EPS grew to $4.47b from $3.88 in the prior year, reflecting improved operational efficiencies and product mix. Notably, the company experienced a significant revenue increase from China, driven by semiconductor equipment spending, while revenue from Korea and Taiwan saw a decline. AMAT's strong liquidity position, substantial cash reserves, and ongoing commitment to returning capital to shareholders through dividends and share repurchases highlight its financial strength and management's confidence in future prospects.
02—Key points
Key Highlights
- Net revenue for the second quarter of fiscal 2024 was $6.646 billion, a slight increase of 0.2% year-over-year, indicating stable demand.
- Diluted earnings per share (EPS) increased to $2.06 in the second quarter of fiscal 2024, up from $1.86 in the prior year, demonstrating improved profitability.
- The Semiconductor Systems segment, the largest revenue contributor, saw a slight decrease in revenue but maintained a strong operating margin.
- Applied Global Services segment revenue grew by 7.2% year-over-year, driven by service agreements and 200mm equipment demand, indicating strong aftermarket support.
- Revenue from China surged by 101% year-over-year in the second quarter, becoming the largest geographic market and reflecting significant investment in semiconductor manufacturing in the region.
- The company continues to return capital to shareholders, with substantial amounts available for stock repurchases ($11.2 billion remaining) and consistent dividend payments.
- Despite a challenging global environment, the company maintains a strong balance sheet with $7.085 billion in cash and cash equivalents and robust liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Applied Materials kept $0.26.
- Revenue$6.65B100.0%
- Cost of revenue−$3.49B52.6%
- Gross profit$3.15B47.4%
- Operating costs−$1.24B18.7%
- Operating income$1.91B28.8%
- Interest, other & tax−$190.0M2.9%
- Net income$1.72B25.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 23, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $6.65B$6.63B | +0.2% |
| Cost of Revenue | $3.49B$3.54B | −1.2% |
| Gross Profit | $3.15B$3.09B | +1.9% |
| R&D Expenses | $785.00M$775.00M | +1.3% |
| Operating Expenses | $1.24B$1.18B | +4.9% |
| Operating Income | $1.91B$1.91B | +0.1% |
| Interest Expense | $59.00M$61.00M | −3.3% |
| Net Income | $1.72B$1.57B | +9.3% |
| EPS (Basic) | $2.08$1.87 | +11.2% |
| EPS (Diluted) | $2.06$1.86 | +10.8% |
| Shares Outstanding (Basic) | 830.00M843.00M | −1.5% |
| Shares Outstanding (Diluted) | 836.00M847.00M | −1.3% |
05—Questions
Frequently Asked Questions
How did Applied Materials perform in the second quarter of fiscal year 2024 compared to the previous year?
In the second quarter of fiscal year 2024, Applied Materials reported net revenue of $6.646 billion, which was largely flat compared to $6.630 billion in the same period last year. Diluted earnings per share (EPS) increased to $2.06 from $1.86, indicating improved profitability and operational efficiency.
What are the key drivers of revenue for Applied Materials?
Applied Materials' revenue is primarily driven by its three reportable segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment is the largest contributor, providing capital equipment for chip manufacturing. Applied Global Services offers ongoing support and upgrades for existing equipment, while Display and Adjacent Markets caters to the manufacturing of displays and other related products. Geographic regions, particularly China, are also significant revenue drivers.
How is the company managing its capital and returning value to shareholders?
Applied Materials maintains a strong financial position with significant cash reserves and continues to return value to shareholders through a substantial stock repurchase program, with approximately $11.2 billion remaining authorization as of April 28, 2024. The company also consistently pays quarterly cash dividends.
What is the outlook for the Semiconductor Systems segment, given its importance to the company?
The Semiconductor Systems segment revenue saw a slight decrease year-over-year, primarily due to lower customer investments in leading-edge manufacturing technologies for foundry and logic. However, increased investments in memory technology transitions and mature manufacturing technologies provided some offset. The segment maintained a strong operating margin, reflecting its strategic importance and the company's ability to manage costs and product mix.
06—Continue