Slide 1: Second Quarter Fiscal 2023 Earnings Presentation
Second Quarter Fiscal 2023 Earnings Presentation May 18, 2023 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: Upcoming Events
UPCOMING June 1, 2023 Bernstein Strategic Decisions Conference June 7, 2023 BofA Securities Global Technology Conference July 11, 2023 Applied Materials technology breakfast at SEMICON West 3 | Applied Materials External
Slide 4: Gary Dickerson, President and Chief Executive Officer
Gary Dickerson President and Chief Executive Officer Applied Materials External
Slide 5: Applied is Well Positioned to Outperform our Markets in 2023
Q2F23 Summary 2023 Applied Outlook 2023 Market Outlook Delivered strong results in Outlook remains favorable Expect 2023 WFE down Y/Y high end of guidance range based on Memory » Balanced market Leading-edge F/L Successfully managing a exposure dynamic near-term ICAPS* environment » Strong p
Slide 6: Semiconductor Industry Growing to $1 Trillion by 2030
Semiconductor Industry Growing to $1 Trillion by 2030 1,200 2030 Semi forecast = $1T 1,000 2022 Semi revenue = $573B 800 2018 ERA 4 : Machine generated data surpasses IoT + AI human generated data 600 Semi revenue = $466B 2002 First Blackberry Smartphone Introduced 400 1990 Semi revenue = $170B Glob
Slide 7: Key Inflections Enabled by Applied's Portfolio
ENABLED BY KEY INFLECTIONS ▪ New ASICs and accelerators New architectures ▪ New memory / in-memory compute ▪ Specialty, CIS, power ▪ GAA transistors New structures / 3D ▪ Backside power delivery ▪ 3D NAND, 3D DRAM COVERING TODAY ▪ Transistor Gate New materials ▪ Transistor Contact ▪ Interconnect Wir
Slide 8: Technology Inflections Enabled by Materials Engineering
Technology Inflections Enabled by Materials Engineering GATE-ALL-AROUND WIRING PATTERNING ADVANCED PACKAGING ▪ Enabled by Applied’s epi, ▪ Significant innovation in ▪ Launched Sculpta® ▪ Packaging revenue to selective removal and new materials for contact pattern-shaping double over next few years c
Slide 9: Growing Service Business
Growing ▪ Record quarterly revenue Service ▪ 15 consecutive quarters of Y/Y growth Business ▪ >60% of recurring revenue generated from subscriptions » 2.6 years average length » >90% renewal rate 9 | Applied Materials External
Slide 10: Investing for Growth
Investing for Growth ▪ Announcing a major strategic investment in a new, high-velocity innovation platform ▪ Changing the collaboration model with customers, universities and industry partners ▪ Details to be announced May 22 10 | Applied Materials External
Slide 11: CEO Summary
CEO ▪ Applied’s performance remains resilient SUMMARY » Broad exposure to secular growth trends » Strong product positions at key technology inflections » Growing service business ▪ Longer-term outlook is very positive » Semiconductors becoming more strategically important globally » Technology infl
Slide 12: Brice Hill, SVP, Chief Financial Officer
Brice Hill SVP, Chief Financial Officer Applied Materials External
Slide 13: CFO Key Points
CFO ▪ Semiconductor industry expected to grow to $1T by 2030 KEY POINTS ▪ Materials engineering increasingly critical to customer roadmaps ▪ Applied’s outperformance driven by » Broad and differentiated portfolio » Balanced market exposure » Growing service business ▪ Efficient business model genera
Slide 14: Strong History of Shareholder Returns
Strong History of Shareholder Returns Over past 10 fiscal years (through FY22) March 2023, Board of Directors approved » Grew dividend per share at 11% CAGR » 23% dividend per share increase » Reduced shares outstanding by nearly 30% » $10B supplemental share repurchase authorization ($13.9B remaini
Slide 15: Q2F23 Non-GAAP Financial Results
Q2F23 Non-GAAP Financial Results $M, except EPS Q2F22 Q1F23 Q2F23 Y/Y Q/Q Revenue 6,245 6,739 6,630 6% (2%) Gross Margin* 47.0% 46.8% 46.8% (20bps) flat Operating Expenses* 1,021 1,165 1,171 15% 1% Operating Income* 1,913 1,987 1,930 1% (3%) Operating Margin* 30.6% 29.5% 29.1% (150bps) (40bps) EPS*
Slide 16: Q2F23 Segment Results
Q2F23 Segment Results SEMICONDUCTOR SYSTEMS APPLIED GLOBAL SERVICES DISPLAY & ADJACENT MARKETS 37% 37% 31% 31% 36% 37% 36% 28% 28% 29% 22% 21% 5,162 1,428 1,420 1,420 5,038 4,977 1,383 1,369 4,734 4,458 13% 14% Non-GAAP Operating Margin* 381 333 251 5% Revenue ($M) 168 167 Q2F22 Q3F22 Q4F22 Q1F23 Q2
Slide 17: Cash Flows and Shareholder Returns
Cash Flows and Shareholder Returns CASH FLOWS ($M) Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Operating Cash Flow 415 1,469 857 2,270 2,292 Free Cash Flow* 205 1,259 634 1,983 2,037 SHAREHOLDER RETURNS ($M) Total Shareholder Returns (2,011) (1,225) (1,723) (470) (1,019) Share Repurchases (1,800) (1,000) (1,500)
Slide 18: Third Quarter Fiscal 2023 Business Outlook
Business Outlook Total Revenue ~$6.15B ± $400M Third OUTLOOK Non-GAAP EPS ~$1.74 ± $0.18 QUARTER Fiscal 2023 Semiconductor Systems ~$4.50B SEGMENT Applied Global Services ~$1.43B REVENUE Display and Adjacent Markets ~$170M Non-GAAP Gross Margin ~46.3% OTHER Non-GAAP Operating Expenses ~$1.17B Non-GA
Slide 19: CFO Summary
CFO ▪ Planning multibillion dollar investment in new infrastructure over next several years; no change to longer-term financial model SUMMARY ▪ Executing well in FY23; benefiting from diverse portfolio, market exposure and customer base ▪ Applied’s business has become less volatile and more resilien
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Slide 21: Applied Materials At-A-Glance
APPLIED MATERIALS AT-A-GLANCE REPORTING SEGMENTS FOUNDED Semiconductor Systems CURRENT FISCAL 1967 YEAR ENDS FIRST PUBLIC Applied Global Services 29 October 2023 OFFERING Display and Adjacent Markets 1972 $3.0 billion ~34,000* $26.6 billion ~17,300** TTM R&D employees TTM REVENUE INVESTMENTS active
Slide 22: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet CASH AND INVESTMENTS ($M) Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Cash and cash equivalents 3,331 2,956 1,995 3,547 4,588 Short-term investments 591 592 586 500 510 Long-term investments 2,102 2,047 1,980 2,088 2,024 Total cash and investments 6,024 5,595 4,561 6,135 7,122 Co
Slide 23: 10-Yr Roadmap: Environmental and Social Responsibility
10-Yr Roadmap | Environmental and Social Responsibility APPLIED’S SEMI INDUSTRY’S GLOBAL OPERATIONS OPERATIONS ELECTRONICS 1x 100x 10,000x Achieved Strong collaboration with PPACt engagements with customers’ 100% renewable energy leading customers on customers focus on energy-efficient in US in 2022
Slide 24: Additional Resources
Additional Resources Investor Relations Home Page LINK Latest News LINK Blog: Ideas, Actions & Technologies LINK 2021 Memory Master Class LINK 2021 Logic Master Class LINK 2021 ICAPS and Packaging Master Class LINK 2021 Process Control and AppliedPRO Master Class LINK 2022 New Ways to Shrink Master
Slide 25: Appendix: GAAP to Non-GAAP Reconciliations
Appendix GAAP to Non-GAAP Reconciliations 25 | Applied Materials External
Slide 26: Use of Non-GAAP Adjusted Financial Measures
Use of Non-GAAP Adjusted Financial Measures Applied provides investors with certain non-GAAP adjusted 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 a
Slide 27: Unaudited Quarterly Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT EPS AND PERCENTAGE Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis $ 2,927 $ 3,006 $ 3,101 $ 3,145 $ 3,094 Certain items associated with acquisitions 1 7 7 6 7
Slide 28: Unaudited Quarterly Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Operating Expenses (GAAP Basis) $ 1,033 $ 1,082 $ 1,107 $ 1,175 $ 1,183 Certain items associated with acquisitions (3) (3) (4) (4) (4) Acquisition integration and deal costs (9) (19) (
Slide 29: 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 PERCENTAGE Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Semiconductor Systems Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,648 $ 1,701 $ 1,849 $ 1,917 $ 1,764 Certain items associat
Slide 30: Unaudited Calculations of Non-GAAP Measures
UNAUDITED CALCULATIONS OF NON-GAAP MEASURES IN MILLIONS Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Free Cash Flows1 Cash provided by operating activities $ 415 $ 1,469 $ 857 $ 2,270 $ 2,292 Capital expenditures (210) (210) (223) (287) (255) Free Cash Flow $ 205 $ 1,259 $ 634 $ 1,983 $ 2,037 FOOTNOTE: 1. Free cas
Slide 31: Reconciliation Information for Business Outlook
RECONCILIATION INFORMATION FOR BUSINESS OUTLOOK Non-GAAP outlook for the third quarter of fiscal 2023 (including non-GAAP gross margin, operating margin, operating expenses and EPS) excludes known charges related to completed acquisitions of approximately $11 million, or $0.01 per share, includes th
Slide 32: Make Possible
Cll arenas. make possible