Slide 1: Fourth Quarter Fiscal 2024 Earnings Presentation
Fourth Quarter Fiscal 2024 Earnings Presentation November 14, 2024 Applied Materials External
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, ou
Slide 3: Gary Dickerson, President and Chief Executive Officer
Gary Dickerson President and Chief Executive Officer Applied Materials External
Slide 4: FY2024: Fifth Consecutive Year of Revenue and Earnings Growth
FY2024 Priorities FY2024 Outcomes Driving R&D programs Strengthened position at to further differentiate major inflections our portfolio Delivered double-digit growth Investing in operational and in parts and services business supply chain improvements Operational improvements Continuing to reduce o
Slide 5: Today's Key Themes
Today’s Key Themes Device architecture Complex industry AI driving need for inflections increasingly roadmap creating energy-efficient enabled by materials incremental growth computing engineering opportunities 5 | Applied Materials External
Slide 6: Tectonic Shifts in Technology are Built on Semiconductors
Tectonic Shifts in Technology are Built on Semiconductors DATA CENTER AI EDGE AI, IOT EV and AV RENEWABLE and ROBOTICS ENERGY AI is the Biggest Inflection of Our Lifetimes 6 | Applied Materials External
Slide 7: Industry Focused on Accelerating Energy-Efficient Performance
Industry Focused on Accelerating Energy-Efficient Performance ENERGY EFFICIENT PERFORMANCE (1 / femtojoules-picoseconds) ▪ AI companies PROJECTED increasingly focused Energy-Efficient Performance (Log Scale) on reducing power- per-operation ▪ Goal is to drive 10,000X improvement in performance-per-w
Slide 8: Key Architecture Inflections Fueling the AI Race
Key Architecture Inflections Fueling the AI Race Leading-Edge Logic High-Performance DRAM High-Bandwidth Memory Advanced Packaging Applied is #1 in Materials Engineering in Each Area 8 | Applied Materials External
Slide 9: Opportunities to Deliver Value and Extend Differentiation
Opportunities to Deliver Value and Extend Differentiation Co-optimized Solutions Integrated Materials Solutions (IMS ) CONNECTED PORTFOLIO DEEPER COLLABORATION ADVANCED SERVICES » Broad, unique and connected » Global EPIC Platform can » AGS delivered record quarterly portfolio of highly enabling acc
Slide 10: Leading-Edge Logic Inflections Benefit Applied
Leading-Edge Logic Inflections Benefit Applied LEADING-EDGE LOGIC TRANSISTORS ▪ Transition from FinFET to Gate-All-Around (GAA) to grow Applied’s transistor SAM from ~$6B to ~$7B* ▪ On track for >50% SAM share Gate-All-Around WIRING ▪ Introduction of Backside Power Delivery (BPD) to grow Applied’s w
Slide 11: Advanced Packaging Inflections Benefit Applied
Advanced Packaging Inflections Benefit Applied ADVANCED PACKAGING HBM PACKAGING ▪ Applied has strong leadership in key technologies including microbump and through-silicon via (TSV) ▪ Generated >$700M of HBM packaging revenue in FY24 High-Bandwidth Memory OVERALL ADVANCED PACKAGING ▪ Revenue grew to
Slide 12: Expect Materials Engineering to Increase within WFE Mix
Expect Materials Engineering to Increase within WFE Mix Materials Engineering vs. Litho/Track WFE Mix* LOGIC DRAM 100% Litho/Track Materials Engineering 0% 20nm+ 16/14nm 7nm 5/4nm 3nm GAA+BPD D1a D1b D1c D1d VT 4F2 3D DRAM Materials engineering % of incremental WFE* >50% >40% >40% >60% >75% >60% >70
Slide 13: CEO Summary
CEO FY24 performance: » Grew revenue and earnings for the fifth consecutive year SUMMARY » Strengthened position at key technology inflections » Delivered double-digit growth in parts and services » Drove operational improvements across Applied and supply chain Looking ahead: » Industry’s roadmap be
Slide 14: Brice Hill, SVP, Chief Financial Officer
Brice Hill SVP, Chief Financial Officer Applied Materials External
Slide 15: Fiscal Year 2024 Record Performance
FISCAL YEAR 2024 Record Performance Semiconductor Systems Applied Global Revenue Group Revenue Services Revenue $27.2B $19.9B $6.2B 2% YoY 1% YoY 9% YoY Gross Profit* Operating Income* Earnings Per Share* $12.9B $7.9B $8.65 4% YoY 3% YoY 7% YoY * Non-GAAP results. For reconciliation of GAAP to
Slide 16: FY2024 Non-GAAP Financial Results
FY2024 Non-GAAP Financial Results $M, except EPS FY2023 FY2024 YoY ▪ Growth in all three business segments Revenue 26,517 27,176 2% ▪ Strengthened position at major inflections in logic, Gross Margin* 46.8% 47.6% 80bps DRAM and advanced packaging Operating Expenses* 4,694 5,002 7% ▪ Highest annual g
Slide 17: Q4F24 Non-GAAP Financial Results
Q4F24 Non-GAAP Financial Results Year-over-year highlights: $M, except EPS Q4F23 Q3F24 Q4F24 YoY QoQ ▪ Solid revenue growth in semiconductor systems Revenue 6,723 6,778 7,045 5% 4% and services ▪ China declined to 30% of Gross Margin* 47.3% 47.4% 47.5% 20bps 10bps revenue, in line with expectations
Slide 18: Semiconductor Systems
SEMICONDUCTOR SYSTEMS Revenue of $5.18B in Q4FY24, up 6% YoY, driven by leading-edge foundry-logic demand » DRAM: sales declined 10% YoY » NAND: sales flat YoY » Foundry-logic: sales increased 12% YoY − Robust growth at the leading-edge, including increasing investments for gate-all-around nodes − S
Slide 19: Applied Global Services to Fund the Company's Growing Dividend
Applied Global Services AGS REVENUE ($B) 7 ▪ Record revenue of $1.6B in Q4FY24, up 11% YoY 6 » Driven by robust growth in services, partially offset by a decline in 200mm equipment sales 5 ▪ Strong subscription operational metrics 4 » 7% YoY increase in installed base 3 » 10% YoY increase in tools u
Slide 20: Display
DISPLAY ▪ Revenue of $211M in Q4FY24 ▪ Industry experiencing lower investment levels amidst ongoing weakness in end market demand ▪ Over time, we expect an increase in capital investments to support the adoption of OLED technology in IT devices like notebooks, PCs, and tablets ▪ Applied is well-posi
Slide 21: Strong Investment-Grade Balance Sheet
Strong Investment-Grade Balance Sheet CASH AND INVESTMENTS ($M) Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 Cash and cash equivalents 6,132 6,854 7,085 8,288 8,022 Short-term investments 737 638 472 815 1,449 Long-term investments 2,281 2,910 2,983 2,981 2,787 Total cash and investments 9,150 10,402 10,540 12,084
Slide 22: Cash Flows and Shareholder Distributions
Cash Flows and Shareholder Distributions CASH FLOWS ($M) Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 FY24 Operating Cash Flow 1,555 2,325 1,392 2,385 2,575 8,677 Free Cash Flow* 1,246 2,096 1,135 2,088 2,168 7,487 SHAREHOLDER DISTRIBUTIONS ($M) Total Shareholder Distributions (968) (966) (1,086) (1,192) (1,771) (
Slide 23: First Quarter Fiscal 2025 Business Outlook
Business Outlook Total Revenue* ~$7.15B ± $400M FIRST OUTLOOK Non-GAAP EPS ~$2.29 ± $0.18 QUARTER FISCAL 2025 Semiconductor Systems ~$5.30B SEGMENT ~$1.65B Applied Global Services REVENUE Display ~$175M Non-GAAP Gross Margin ~48.4% OTHER Non-GAAP Operating Expenses ~$1.33B Non-GAAP Tax Rate ~14.0% *
Slide 24: CFO Summary
CFO Achieved record revenue and EPS in FY2024 with momentum across the majority of our markets SUMMARY Portfolio positions us to capitalize on the secular megatrends shaping the technology landscape Strong investment-grade balance sheet, solid cash generation and healthy shareholder distributions 24
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Slide 26: Capital Allocation Strategy
Capital Allocation Strategy 1. Invest in R&D and infrastructure OVER PAST 10 FISCAL YEARS (through FY24) to enable profitable growth » Reinvested >$22B in R&D and >$6B in capital additions » Distributed nearly 90% of FCF* 2. Grow dividend per share and use » Grew dividend per share at ~15% CAGR buyb
Slide 27: Latest 3rd Party ESG Ratings
LATEST 3rd PARTY ESG RATINGS CDP Climate A- CDP Water B MSCI AAA Sustainalytics Risk Rating Low ISS (E/S/G) 2/2/1 Links: 2023 Sustainability Report | 2023 Sustainability Highlights 27 | Applied Materials External
Slide 28: Additional Resources
Additional Resources Investor Relations Home Page LINK Latest News LINK Blog: Ideas, Actions & Technologies LINK 2024: Semicon West Technology Breakfast LINK 2024: 2023 WFE Market Summary LINK 2024: Applied Materials Panel Discussion during SPIE Conference LINK 2022: Services Master Class LINK 28 |
Slide 29: Appendix: GAAP to Non-GAAP Reconciliations
Appendix GAAP to Non-GAAP Reconciliations 29 | Applied Materials External
Slide 30: Use of Non-GAAP Adjusted Financial Measures
Use of Non-GAAP Adjusted Financial Measures Applied provides investors with certain non-GAAP financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any as
Slide 31: Unaudited Quarterly Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 Non-GAAP Gross Profit GAAP reported gross profit $ 3,169 $ 3,204 $ 3,153 $ 3,205 $ 3,335 Certain items associated with acquisitions 1 8 7 7 6 6
Slide 32: Unaudited Quarterly Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 GAAP reported Operating Expenses $ 1,198 $ 1,237 $ 1,241 $ 1,263 $ 1,289 Certain items associated with acquisitions1 (3) (4) (3) (4) (5) Acquisition integration and deal costs (2) (3)
Slide 33: Unaudited Quarterly Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income $ 1,741 $ 1,744 $ 1,701 $ 1,712 $ 1,824 Certain items associated with acquisit
Slide 34: Unaudited Quarterly Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED QUARTERLY RECONCILIATION OF NON-GAAP FREE CASH FLOW IN MILLIONS Q4F23 Q1F24 Q2F24 Q3F24 Q4F24 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 1,555 $ 2,325 $ 1,392 $ 2,385 $ 2,575 Capital expenditures (309) (229) (257) (297) (407) Non-GAAP free cash flow $ 1,246 $ 2,096 $
Slide 35: Unaudited Full Year Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES FY2023 FY2024 Non-GAAP Gross Profit GAAP reported gross profit $ 12,384 $ 12,897 Certain items associated with acquisitions 1 29 26 Impairment of long-lived assets - 3 Non-GA
Slide 36: Unaudited Full Year Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS FY2023 FY2024 GAAP reported Operating Expenses $ 4,730 $ 5,030 Certain items associated with acquisitions1 (14) (16) Acquisition integration and deal costs (22) (12) Non-GAAP operating expenses $ 4,694 $ 5,002 FOOT
Slide 37: Unaudited Full Year Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES FY2023 FY2024 Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income $ 6,879 $ 6,981 Certain items associated with acquisitions 1 39 40 Non-GAAP adjusted operating
Slide 38: Unaudited Full Year Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED FULL YEAR RECONCILIATION OF NON-GAAP FREE CASH FLOW IN MILLIONS FY2015 FY2016 FY2017 FY2018 FY2019 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 1,163 $ 2,566 $ 3,789 $ 3,787 $ 3,247 Capital expenditures (215) (253) (345) (622) (441) Non-GAAP free cash flow $ 948 $ 2,31
Slide 39: Reconciliation Information for Business Outlook
RECONCILIATION INFORMATION FOR BUSINESS OUTLOOK Non-GAAP outlook for the first quarter of fiscal 2025 excludes known charges related to completed acquisitions of approximately $10 million, or $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of
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