01—Abstract
Summary
Summary of the 10-Q filed August 21, 2025. Cited figures are marked; the original filing is the authoritative source.
Applied Materials Inc. (AMAT) reported strong revenue growth in the third quarter of fiscal year 2025, with net revenue reaching $7.302 billiona, an increase of 8% year-over-year.
This growth was primarily driven by the Semiconductor Systems segment, which saw a 10%b increase in net revenue. The company also demonstrated improved profitability, with gross margin rising to 48.8% and operating margin reaching 30.6%, both improvements over the prior year's comparable periods.
Diluted earnings per share also saw a healthy increase to $2.22c, up from $2.05 in the same quarter last year. Despite a decrease in cash and cash equivalents from the previous fiscal year-end, likely due to significant share repurchases and dividend payments, the company maintains a solid financial position with substantial investments and a large remaining authorization for stock repurchases, signaling continued confidence in its future performance and commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Net revenue increased by 8% year-over-year to $7.302 billion for the three months ended July 27, 2025.
- Semiconductor Systems segment revenue grew by 10% year-over-year, driven by foundry, logic, and NAND investments.
- Gross margin improved to 48.8% and operating margin to 30.6% compared to the prior year's periods, indicating enhanced profitability.
- Diluted earnings per share increased to $2.22 from $2.05 year-over-year, reflecting improved profitability.
- The company repurchased $1.038 billion of common stock during the quarter, demonstrating a commitment to shareholder returns.
- Cash and cash equivalents decreased to $5.384 billion from $8.022 billion at the prior fiscal year-end, primarily due to significant capital allocation activities including share repurchases and dividends.
- Remaining authorization for stock repurchases stands at a substantial $14.8 billion as of July 27, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Applied Materials kept $0.24.
- Revenue$7.30B100.0%
- Cost of revenue−$3.74B51.2%
- Gross profit$3.56B48.8%
- Operating costs−$1.33B18.2%
- Operating income$2.23B30.6%
- Interest, other & tax−$454.0M6.2%
- Net income$1.78B24.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed August 21, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $7.30B$6.78B | +7.7% |
| Cost of Revenue | $3.74B$3.57B | +4.7% |
| Gross Profit | $3.56B$3.21B | +11.1% |
| R&D Expenses | $901.00M$836.00M | +7.8% |
| SG&A Expenses | $428.00M— | — |
| Operating Expenses | $1.33B$1.26B | +5.2% |
| Operating Income | $2.23B$1.94B | +15.0% |
| Net Income | $1.78B$1.71B | +4.3% |
| EPS (Basic) | $2.23$2.06 | +8.3% |
| EPS (Diluted) | $2.22$2.05 | +8.3% |
| Shares Outstanding (Basic) | 798.00M826.00M | −3.4% |
| Shares Outstanding (Diluted) | 802.00M833.00M | −3.7% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the third quarter of fiscal year 2025?
Revenue growth was primarily driven by the Semiconductor Systems segment, which experienced a 10% year-over-year increase, supported by customer investments in foundry, logic, and NAND fabrication. Applied Global Services (AGS) also contributed with increased revenue from long-term service agreements and spares.
How did the company's profitability change compared to the prior year?
Profitability improved significantly. Gross margin increased to 48.8% from 47.3% in the prior year's comparable quarter, and operating margin rose to 30.6% from 28.7%. This was attributed to higher net revenue, favorable product mix, and increased average selling prices.
What is the company's stance on returning capital to shareholders?
Applied Materials continues to demonstrate a strong commitment to returning capital to shareholders. During the quarter, the company repurchased $1.038 billion of its common stock and paid dividends. A significant remaining authorization of $14.8 billion for future stock repurchases signals ongoing capital return plans.
What are the key risks highlighted by the company in its filings?
The company highlighted several key risks including the cyclical nature of the semiconductor and display industries, volatile global economic conditions, geopolitical factors and trade disputes (especially concerning China), supply chain disruptions, intense competition, intellectual property protection, cybersecurity threats, and the inability to attract and retain key employees. Additionally, changes in tax laws and regulations, particularly in the US and global minimum tax regimes, pose ongoing risks.
06—Continue