Lam Research (LRCX) Q1 2025 earnings summary

Executive summary

• Achieved fifth consecutive quarter of revenue growth, with Q1 FY2025 revenue at $4.17 billion and diluted EPS at $0.86, both exceeding guidance midpoints and prior quarter results.

• Profitability was above the high end of guidance, with strong execution and investments in technology inflections positioning the company to outperform wafer fabrication equipment (WFE) growth in 2025.

• AI-driven demand and technology upgrades in NAND, Foundry/Logic, and DRAM are expected to drive disproportionate growth.

• The company completed a ten-for-one stock split effective October 2, 2024.

• Net income reached $1.12 billion, up from $887 million in the prior year quarter.

Financial highlights

• Q1 FY2025 revenue was $4.17 billion, up 8% sequentially and 20% year-over-year; deferred revenue rose to $2.05 billion, mainly from customer prepayments.

• Gross margin was 48.2% (non-GAAP) and 48.0% (GAAP), exceeding guidance; operating margin reached 30.9% (non-GAAP) and 30.3% (GAAP).

• Free cash flow was $1.46 billion; cash and equivalents ended at $6.1 billion.

• Diluted EPS was $0.86 (post-split), up from $0.81 in the prior quarter.

• Net income was $1,116 million (GAAP) and $1,122 million (non-GAAP), both up from the previous quarter.

Outlook and guidance

• December 2024 quarter revenue guidance: $4.3 billion ± $300 million; gross margin 47% ± 1pp; operating margin 30% ± 1pp; EPS $0.87 ± $0.10.

• WFE for 2024 expected in the mid-$90 billion range; 2025 WFE growth anticipated, with company revenue expected to outpace WFE.

• Management expects continued volatility in semiconductor demand in the short term, but projects sustainable long-term growth due to secular demand and technology inflections.

• China revenue share expected to normalize to ~30% in December and trend lower in 2025.