01—Abstract
Summary
Summary of the 10-Q filed October 28, 2024. Cited figures are marked; the original filing is the authoritative source.
Lam Research (LRCX) reported strong results for the quarter ended September 29, 2024 (fiscal Q1 2025).
Revenue rose to $4.17 billiona, up 20% year over year and 8% sequentially, with systems revenue of $2.39 billion and customer support-related revenue of $1.78 billion. Gross margin improved to 48.0% from 47.5% in the prior-year quarter, and operating income reached $1.26 billion. Net income was $1.12 billion, or $0.86 per diluted share, versus $0.67 a year earlier.
These figures are presented on a post-split basis following the ten-for-one stock split effective October 2, 2024. Growth was driven by DRAM investment and foundry spending, partially offset by lower non-volatile memory spending. Deferred revenue climbed to $2.05 billionb from $1.55 billion at June 30, 2024, mainly due to higher customer advance deposits, which points to healthy forward demand visibility.
China remained the largest region at 37% of revenue, though its share fell from 48% a year earlier as Korea, Taiwan, and the United States grew. Management expects higher wafer fabrication equipment spending in calendar 2024 but flags volatility and export-control risk. Capital returns were substantial: the company repurchased about $1.0 billionc of stock and paid $261 million in dividends, while generating $1.57 billion in operating cash flow.
Cash and equivalents reached $6.07 billiond against $4.98 billion of senior debt and finance leases, and $9.8 billion remained under the repurchase authorization. Investors should watch the concentration of revenue in China, the sharp rise in income tax payable, and the sustainability of the deferred revenue build.
02—Key points
Key Highlights
- Revenue of $4.17B grew 20% year over year and 8% sequentially, led by systems revenue (+16% YoY) and customer support (+25% YoY).
- Gross margin expanded to 48.0% from 47.5% a year earlier, reflecting improved factory efficiencies and lower material costs.
- Diluted EPS of $0.86 rose from $0.67 a year earlier, with net income of $1.12B (post ten-for-one stock split).
- Deferred revenue rose to $2.05B from $1.55B at June 30, 2024, driven by higher customer advance deposits.
- China fell to 37% of revenue from 48% a year earlier, while Korea, Taiwan, and the United States gained share.
- Operating cash flow of $1.57B funded $997M of share repurchases and $261M of dividends, with $9.8B left under the buyback authorization.
- Effective tax rate rose to 13.7% from 11.6% sequentially, and income taxes payable dropped to $665M from $813M.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Lam Research Corp kept $0.27.
- Revenue$4.17B100.0%
- Cost of revenue−$2.17B52.0%
- Gross profit$2.00B48.0%
- Operating costs−$738.5M17.7%
- Operating income$1.26B30.3%
- Interest, other & tax−$147.8M3.5%
- Net income$1.12B26.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed October 28, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $4.17B$3.48B | +19.7% |
| Cost of Revenue | $2.17B$1.83B | +18.5% |
| Gross Profit | $2.00B$1.65B | +21.0% |
| R&D Expenses | $495.36M$422.63M | +17.2% |
| SG&A Expenses | $243.13M$207.02M | +17.4% |
| Operating Expenses | $738.49M$631.67M | +16.9% |
| Operating Income | $1.26B$1.02B | +23.6% |
| Net Income | $1.12B$887.40M | +25.8% |
| EPS (Basic) | $0.86$0.67 | +28.4% |
| EPS (Diluted) | $0.86$0.67 | +28.4% |
| Shares Outstanding (Basic) | 1.30B1.33B | −2.0% |
| Shares Outstanding (Diluted) | 1.30B1.33B | −2.1% |
05—Questions
Frequently Asked Questions
How strong was Lam Research's revenue and profitability growth this quarter?
Revenue reached $4.17B, up 20% from $3.48B a year earlier. Operating income rose to $1.26B from $1.02B, and net income reached $1.12B versus $887M, with diluted EPS of $0.86 compared with $0.67, all on a post-split basis.
What is driving the increase in deferred revenue and what does it signal?
Deferred revenue increased to $2.05B from $1.55B, mainly because customers made higher advance deposits. This suggests strong near-term order intake, though it also means part of the revenue is recognized later and can shift timing from quarter to quarter.
How concentrated is Lam's revenue by geography, and what are the risks?
China accounted for 37% of revenue, down from 48% a year earlier but still the largest market. Export-control rules restrict sales to certain Chinese customers and could reduce revenue, so this concentration remains a key risk for investors.
How is the company returning capital to shareholders?
In the quarter Lam repurchased about $1.0B of stock and paid $261M in dividends, and declared a quarterly dividend of $0.23 per share. About $9.8B remained under the $10B buyback authorization approved in May 2024.
Is the balance sheet strong enough to support ongoing investment?
Cash and equivalents rose to $6.07B, and management believes operating cash flow and existing cash cover operations, capital spending, debt service, and dividends for at least the next twelve months. Total debt including finance leases is about $5.0B, and the company has a $1.5B revolver and a $1.5B commercial paper program.
06—Continue