On August 15, 2024, Applied Materials Inc (AMAT, Financial) released its 8-K filing for the third quarter of fiscal year 2024, showcasing impressive financial results that surpassed analyst expectations. Applied Materials, the largest semiconductor wafer fabrication equipment manufacturer globally, reported record revenue and significant earnings growth, driven by strong demand in the semiconductor industry.
Company Overview
Applied Materials Inc (AMAT, Financial) is a leader in materials engineering solutions, producing equipment used in the manufacturing of semiconductor wafers. The company holds a dominant market share in deposition processes and serves major chipmakers such as TSMC, Intel, and Samsung. Applied Materials' broad portfolio spans nearly every corner of the wafer fabrication ecosystem, making it a critical player in the semiconductor industry.
Q3 2024 Financial Performance
Applied Materials reported record revenue of $6.78 billion for Q3 2024, a 5% increase year-over-year, surpassing the analyst estimate of $6.673 billion. The company's GAAP operating margin improved to 28.7%, while non-GAAP operating margin reached 28.8%, reflecting a year-over-year increase of 0.7 and 0.5 percentage points, respectively.
GAAP earnings per share (EPS) were $2.05, and non-GAAP EPS stood at $2.12, both exceeding the analyst estimate of $2.08. This represents an 11% and 12% increase year-over-year, respectively. The company generated $2.39 billion in cash from operations and returned $1.19 billion to shareholders through share repurchases and dividends.
Key Financial Metrics
| Metric | Q3 FY2024 | Q3 FY2023 | Change |
|---|---|---|---|
| Net Revenue | $6.78 billion | $6.43 billion | 5% |
| Gross Margin | 47.3% | 46.3% | 1.0 point |
| Operating Margin | 28.7% | 28.0% | 0.7 points |
| Net Income | $1.705 billion | $1.560 billion | 9% |
| Diluted EPS | $2.05 | $1.85 | 11% |
Segment Performance
The Semiconductor Systems segment, which is the largest contributor to Applied Materials' revenue, reported $4.92 billion in revenue, up from $4.68 billion in Q3 2023. The segment's operating margin improved to 34.8% from 33.5% year-over-year. The Applied Global Services segment also showed growth, with revenue increasing to $1.58 billion from $1.46 billion, and operating margin rising to 29.6% from 27.3%.
Commentary and Outlook
“Applied Materials is delivering strong results in 2024 with record revenues in our fiscal third quarter and earnings towards the high end of our guided range,” said Gary Dickerson, President and CEO. “The race for AI leadership is fueling demand for our unique and connected portfolio of products and services, positioning Applied to outperform our markets over the longer term.”
Looking ahead, Applied Materials expects Q4 2024 revenue to be approximately $6.93 billion, plus or minus $400 million, with non-GAAP diluted EPS projected to range between $2.00 and $2.36. This optimistic outlook reflects the company's confidence in sustained demand for its semiconductor manufacturing solutions.
Conclusion
Applied Materials Inc (AMAT, Financial) has demonstrated robust financial performance in Q3 2024, exceeding analyst estimates and achieving record revenue. The company's strong market position, coupled with growing demand in the semiconductor industry, underscores its potential for continued growth. Investors and stakeholders will be keenly watching how Applied Materials leverages its strengths to navigate future opportunities and challenges in the dynamic semiconductor market.
Explore the complete 8-K earnings release (here) from Applied Materials Inc for further details.
