Applied Materials (AMAT) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenue of $6.78B, up 5% year-over-year, driven by strong demand in AI, data center, and advanced packaging markets, with leadership in DRAM and services.

• Non-GAAP EPS rose 12% to $2.12, and GAAP EPS increased 11% to $2.05, both near the high end of guidance.

• Strategic focus on accelerating the industry roadmap through materials engineering, integrated solutions, and deep customer collaboration.

• Leadership transition announced, with Mike Sullivan retiring and Liz Morali taking over Investor Relations.

• Unique, connected materials engineering portfolio positions the company to outperform amid secular growth trends in AI, IoT, robotics, EVs, and clean energy.

Financial highlights

• Q3 revenue reached $6.78B, up 5% year-over-year, with growth across all segments; non-GAAP gross margin was 47.4%, up 100bps YoY.

• Non-GAAP operating income was $1.95B, up 7% YoY; GAAP operating margin was 28.7%, up 0.7 pts YoY.

• Non-GAAP EPS was $2.12, up 12% YoY; net income grew 9% YoY to $1.71B.

• Operating cash flow for Q3 was $2.39B; free cash flow was $2.09B.

• Distributed $1.19B to shareholders in Q3 via $861M in buybacks and $331M in dividends.

Outlook and guidance

• Q4 revenue expected at ~$6.93B ± $400M, with non-GAAP EPS guidance of $2.18 ± $0.18.

• Semi Systems revenue forecasted at $5.1B (+4% YoY), AGS at $1.61B (+9% YoY), and display at $200M.

• Non-GAAP gross margin expected to remain at 47.4%; operating expenses around $1.28B; tax rate modeled at 12.5%.

• Guidance excludes known acquisition charges and includes certain tax benefits; does not reflect unknown or unusual items.

• Customer investments expected to remain strong, driven by high-bandwidth memory, advanced packaging, AI, and mature nodes.